In a bid to resurrect the falling profits of the shipping industry and to see fresh investments in the coastal shipping sector, the Indian Ministry of Finance announced on 24th July 2015 their decision to reduce customs duty levied on bunker fuels.
The Government’s decision to reduce customs duty will result in Rs.57 crore less revenue to the exchequer. However, with the reduction of customs duty that amounts to nearly 25 % of the operating costs, the bunker charges that amount to nearly 40% of the operating cost are likely to bring down the net prices by about 10% for ship operators.
The bunker fuels exempted from Customs and Excise Duty leviable are IFO 180 CST and IFO 380 CST used in Indian-flagged vessels for transportation of EXIM as well as empty containers transiting between two or more ports in India.
This move will result in Indian ship owners and operators play at level field with foreign flagged vessels, which do not have to pay customs duty on bunker fuel when they move export-import containers. It is also a known fact that shipping companies in India are battling to turn a decent profit despite falling bunker fuel rates.