Financial Daily from THE HINDU group of publications
Tuesday, Aug 10, 2004
Foreign Direct Investment
Plans afoot to allow 100% FDI in inland water transport sector
New Delhi , Aug. 9
THE Shipping Ministry has floated a plan to allow 100 per cent foreign direct investment (FDI) in inland water transport (IWT) infrastructure and operations along with a host of fiscal and policy initiatives to popularise IWT as a viable mode of transport and ensure a modal shift from rail/road to this sector.
"Private investments in IWT sector will be encouraged along with 100 per cent FDI in IWT infrastructure and operations", says the policy for maritime sector drafted by the Ministry.
A Development Fund for IWT with a corpus of Rs 500 crore will be created at the National level. The existing subsidy scheme for the IWT sector will be re-examined and amended for restricting its scope to infrastructure and vessels and not for operations.
It is proposed to provide Income Tax exemption for 20 years for investments made by companies in IWT infrastructure or IWT vessels. The rate of depreciation for IWT vessels will be made 5 per cent higher than the depreciation for ocean-going vessels.
Income earned by companies from IWT operations will be exempted from IT/Corporate Tax up to 100 per cent for 10 years and up to 50 per cent in next 10 years. It is also proposed to allow duty-free import of equipment, machineries, spares, installations etc for IWT development and operations.
To provide adequate cargo support, Government/PSU cargo would be moved by IWT. Suitable incentives are also proposed to be given to PSUs to encourage modal shift from rail and road to IWT. Specific projects for infrastructure development will be identified for implementation through joint venture/ build, operate and transfer (BOT) route.
A dredging policy for inland water channels will be prepared and operationalised. Additional IWT terminals would be set up at potential locations and four-lane road connectivity as well as rail connectivity, wherever needed, would be provided for loading and evacuation of cargo.
Need-based cargo handling equipment and storage/warehousing space would be provided for which state governments would have to chip in with sufficient land free-of-cost. Navigational aids including night navigation facilities would be provided on all the three National Waterways within a year.
A scheme for fairway development and maintenance of each National Waterway will be prepared and implemented.
Currently, the share of IWT in India is only 0.15 per cent of the total inland cargo transportation in terms of tonne kms. "The proposed IWT policy seeks to increase this share to 2 per cent by 2025," says the policy paper acknowledging that IWT is an eco-friendly, cost-effective and fuel efficient mode of transport with huge potential for employment generation.
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