Class 1 (Chief Engineer) Engineering Management 📅 Oct 2021

Exam Question

(a) Onerous Tax Regimes, Multiplicity of Regulations, Quality Manpower Shortage. High Port Calling Costs, Congestion in Ports and Lack of connectivity with Hinterland etc., are projected as the major impediments for the growth of coastal shipping in India. Discuss.

(b) The 'Sagar Mala Programme' is an initiative by the government of India to enhance the performance of the country's logistics sector and is aimed to boost the developmentof coastal shipping in India. Discuss.

Reference Answer

### (a) Impediments to the Growth of Coastal Shipping in India
Coastal shipping, despite its potential as an economical and environmentally friendly mode of transport, faces several significant impediments in India. A detailed discussion of these challenges is as follows:
**1. Onerous Tax Regimes:**
* **Goods and Services Tax (GST):** Bunker fuels (HFO, MGO) used by Indian coastal vessels are subject to GST. This is a significant disadvantage compared to road and rail transport, where fuel is outside the GST ambit and falls under VAT, allowing for credits. This differential tax treatment inflates the operational cost of coastal shipping, making it less competitive.

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