The Hindu Business Line : Govt to cut vessel-related charges for coastal shipping

IN a major policy reform aimed at weaning away traffic from the highly congested rail/road transport to coastal shipping, the Shipping Ministry has decided to cut vessel-related charges for coastal ships by a further 10 per cent and extend the concession to coastal cargo as well.

As per the decision, the vessel-related charges for coastal vessels will now be pegged at 60 per cent of the charges for foreign-going vessels. Currently, the coastal vessel rates are prescribed at 70 per cent of the foreign-going vessel rates, which in other words imply a discount of 30 per cent. By pegging the vessel-related charges at 60 per cent of the foreign-going vessels, the discount is being raised from 30 per cent to 40 per cent. The concession, which was so far limited to the vessel-related charges for coastal vessels, will now be extended to coastal cargo also.

Accordingly, the cargo-related charges for coastal cargo will be fixed at 60 per cent of the cargo-related charges for other cargoes, implying a discount of 40 per cent.

Besides, the vessel-related charges for coastal vessels will be de-linked from fluctuations in foreign currency. The coastal vessel rates are prescribed in rupee terms whereas foreign-going vessel rates are denominated in dollar terms.

Due to depreciation of the Indian rupee vis-à-vis the dollar, the disparity in rates between coastal vessels and foreign-going vessels has widened, necessitating an adjustment in the coastal vessel rates at the time of tariff revision even if there is no revision of the rates for foreign-going vessels.

The major port trusts have complained that such an upward revision of coastal vessel rates will entail a heavy burden on coastal vessels, causing diversion of coastal vessel traffic, thereby adversely impacting their traffic.

"The Shipping Ministry is in the process of issuing directions to the Tariff Authority for Major Ports (TAMP) under section 111 of the Major Port Trusts Act, 1963, for bringing down both vessel- and cargo-related charges for coastal vessels and coastal cargo at major ports," a senior Ministry official said.

"With the above concessions, more cargo is expected to be carried through the coastal route, thereby reducing congestion on the existing rail/road network," the official said. Out of the total domestic cargo of 1,515 million tonnes moved during 2002-'03, about 120 million tonnes was carried through coastal shipping, translating into a share of just 7 per cent. It is very low compared with the European Union, where coastal shipping has 43 per cent share.

"Our goal should be to divert at least 5 per cent or 75 million tonnes per year of the cargo moved by rail and road as on today in the next 10 years. In addition to the incremental cargo of 100 million tonnes to be moved by coastal shipping, the share of coastal shipping should reach a level of 12-13 per cent of the total domestic cargo by 2012," the official said.