Major Ports exempt Ro-Pax / Passenger Ferries from paying Port and Vessel related charges for next 6 months
MoPSW requests MoPNG and MoF to
reduce the rates and taxes on Fuel to Ferries
States also requested to lower their VAT on HSD used by Ferries
Ministry of
Ports, Shipping and Waterways (MoPSW) is promoting the Ro-Ro/Ro-Pax/Ferry
waterway transportation which has lower emissions compared to other modes of
transport for the same amount of cargo. Also, there is a significant time and
cost saving compared to the traditional transportation modes. Concurrently
traffic congestion on road/railways, noise pollution and the accidents on the
roads may also get reduced. Such water-based transportation service is an
effective measure to lower the logistics costs, reducing travel time and
promotion of coastal shipping on several feasible routes.
In order to provide some quick respite to this sector
from the impact of Global Increase in Price of Fuel, MoPSW has directed all
Major Ports to exempt all berth hiring and vessel related charges being
currently levied to the Ro-Pax/ Passenger Ferries for the next six months with
immediate effect.
The cost of Marine fuel ‘Low Sulphur High Flash High
Speed Diesel’ (LSHFHSD) has increased from Rs 76,000/KL to Rs 1,21,000/KL.
Similarly, the cost of ‘Very Low Sulphur Fuel Oil’ (VLSFO) has increased from
Rs.40608/KL to Rs.80917/KL. It is to be noted here that in the beginning of FY
2021-22 the cost of marine fuel-LSHFHSD used to be 10-15% less than retail
diesel-HSD. Hence, effectively the rise is more than 40%.
To discuss the Impact of High Marine Fuel Prices
and GST on Ferry Operations Union Minister MoPSW Sarbananda Sonowalhad
recently held meeting with Navneet Mohan Kothari, Joint Secretary (GP Division)
Ministry of Petroleum and Natural Gas and Niba Ram, Joint Commissioner,
Department of Revenue, Ministry of Finance and other senior officials.
In this regard he had also written letters to Nirmala
Sitharaman, Union Minister, Ministry of Finance and Corporate Affairs and Hardeep
Singh Puri, Union Minister, Ministry of Petroleum and Natural Gas highlighting
this issue and requested them to extend their support for this sector by
reducing taxes and price of the Fuel respectively. MoPSW has also requested all
the states to lower their rates of VAT over the HSD used by this sector.
It is noteworthy that, marine fuel prices inclusive
of taxes have cascading effect on the full value chain of Mass Surface Water
transport system and ecosystem, the burden of which the ferry operators cannot
pass on to the common public who has the option of using other Government
subsidized public transport system of rail or road. These operational hurdles
will ultimately act as stumbling block in establishing this budding ecosystem
of surface water transportation in the country.
As per the notification no.1212017- Central Tax (rate)
dated 28.06.2017, it is mentioned that service of transportation of passengers
through inland waterways is exempted from GST. lf in case the GST component,
applicable on spares and MRO services of the ferries, is passed on to the
passengers where Mass Surface Water transport system and ecosystem is competing
against the Govt. heavily subsidised Road, Rail and Air travel under Regional
Air connective scheme UDAN, the price of tickets will increase and, the demand
of the service may be impacted negatively.
Sarbananda Sonowal said, “The
rising Fuel cost at international level is now making our local Ro-Pax and
Passenger Ferry operations unviable so this exemption of vessel and port
related charges by MoPSW will provide the necessary breather to this sector for
the next 6 months. We have also requested MoPNG to consider reduction
in Fuel prices and Ministry of Finance to lower the associated taxes on it so
as to provide the necessary support to this sector in present circumstances.”
The Ro-Pax services implemented by Deendayal Port
Authority between Ghogha and Hazira under Sagarmala Programme have reduced
travel time from 12 to 4 hours. This Ro-Pax ferry service has carried over
78,000 vehicles and more than 2.6 lakh passengers since inception. Similarly,
Maharashtra Maritime Board initiated Ro-Pax ferry service on Mumbai - Mandwa
route. Project resulted in saving of around 3 hours of road travel against 45
minutes by sea route. More than 5.5 Lakh passengers have availed this Ro-Pax
service and more than 1 lakh vehicles have been transported.
In order to promote the surface water transportation and
to encourage the newly emerging inland passenger and vehicle movement eco
system of the country, thevarious issues of rising Global Marine Fuel prices
and their bunker pricing, ineffective GST input credit for Ferry Operators,
Growing difference between the cost of Marine Fuel and Retail Fuel should be
looked into and necessary consideration should be given to promote this sector.