Cabinet approves Rs1,624-cr subsidy for Shipping Companies

Union Cabinet has approved a scheme to provide Rs 1,624 crore as subsidy to Indian shipping companies.

Highlights

• Subsidy will be provided for over five years.
• Global tenders for this scheme were floated by ministries and central public sector enterprises (CPSEs) for import of government cargo.

About scheme

• Under this scheme, registration will be done online within 72 hours like world’s best ships registries. Registration will make it easy and attractive to register ships across India and aid in boosting Indian tonnage.
• This scheme seeks to provide 30 days to in-flagging vessel to replace crew on board with Indian crew.
• According to it, ships that were flagged in India after February 1, 2021 and is having flagging time of less than 10 years in India, will get subsidy support of 15 percent of quote offered by L1 foreign shipping company.
• Ships flagged in India after February 1, 2021 and having flagging time of 10 to 20 years in India, subsidy support will be extended at 10 per cent.
• The rate of extended subsidy support would be reduced by 1 per cent every year till it reduced to 10 per cent and 5 per cent for two categories of ships, respectively.
• Budgetary support would be provided directly to ministry/department concerned.

Background

Announcement for this scheme was made by Finance Minister Nirmala Sitharaman in Union Budget 2021-22 to address cost disadvantage suffered by Indian flag ships. This scheme was announced over five years to promote flagging of merchant ships across India.

Why this scheme was proposed?

This scheme was proposed because despite having 7,500 km long coastline, a national exim trade which is steadily growing on annual basis, policy of 100 per cent FDI in shipping since 1997; Indian shipping industry is proportionately small as compared to global counterparts.

Month: Current Affairs - July, 2021