The Hindu Business Line : Vessel-related charges — Three-tier slab structure planned

Acting on the recommendations of the Committee on Vessel Related Charges, the Shipping Ministry plans to introduce a three-tier slab structure for levying vessel-related charges on ships calling at major ports. It has also agreed to unbundled pilotage operations and is looking at the possibility of rolling back the service tax on port services, as recommended by the Committee.

THE Government looks set to introduce a three-tier slab structure for levying vessel-related charges on ships calling at major ports with the Shipping Ministry accepting a recommendation made by an Expert Committee.

However, a final decision on whether such charges should be levied on the basis of the over-all length (LOA) of the ship or on its Gross Registered Tonnage (GRT) would require extensive deliberations. The Committee on Vessel Related Charges set up by the Shipping Ministry had recommended GRT as the unit for levying vessel-related charges.

In the case of such charges pertaining to port dues and berth hire, the Committee felt a single slab would suffice. But for pilotage-in and pilotage-out shifting, the Committee had recommended three slabs — up to 30,000 GRT, from 30,001 to 60,000 GRT and above 60,000 GRT.

To encourage calling of more mainline vessels to the ports, the Committee had suggested a 20 per cent reduction in the vessel-related charges on the rate of the first slab could be effected for the second slab while a reduction of 30 per cent on the rate of the first slab could be effected for the third slab on the incremental GRT.

"We have accepted that there should be three slabs as recommended by the Committee," a senior Ministry official said. "However, the issue of Length Over-All (LOA) v/s GRT should be studied in-depth, keeping in view the type of vessels, both for container and bulk cargoes, that visit Indian ports and how the future traffic would be affected if the charges are levied on the basis of LOA or GRT," he said.

Besides, the Ministry has accepted the recommendation to un-bundle the pilotage operations into pilotage-in, pilotage-out, shifting and tug hire charge to enable private operators at major ports to pay the charges for the service availed.

The Shipping Ministry has also urged the Finance Ministry to roll back the service tax on port services as recommended by the Committee. "We have taken up the issue with the Finance Ministry", the official said.

The Committee was of the view that the service tax on port services should be withdrawn since the additional burden on shippers had the effect of making the handling charges at Indian ports more expensive.

Further, the Committee had recommended that the return on capital employed for replacement and modernisation of assets should be raised from 3 per cent now to 15 per cent to generate adequate internal resources to update and modernise facilities to international standards to provide services at par with ports of other countries in the region. "A decision in this regard would have to be taken by the Tariff Authority for Major Ports (TAMP) as it came under the purview of the tariff regulator," he said.

The Ministry has agreed "in-principle" to the Committee recommendation that the expenditure relating to dredging (both capital and maintenance) at major ports should be funded by the government in order to lower the marine costs of which these two elements are the main inputs. "However, a final decision in this regard would be taken with the approval of the Finance Ministry," the official said.

The Ministry has acknowledged the views of the Committee that higher manning scales and datum jack up the marine charges significantly. To overcome this, it has accepted the suggestion that the manning scale and datum should be revised in a time-bound manner after the implementation of the award of the national tribunal and the surplus manpower should be allowed to exit either through a voluntary retirement scheme (VRS) or compulsory retirement scheme (CRS) as decided by the Government.

According to the Ministry, the ports were free to decide the percentage of expenditure relating to shore-based fire-fighting installation that should be charged as part of the vessel related charges. " However, we do not accept that there should be any increase in the cargo related charges on this account", the official said.

To reduce the marine expenditure, the Committee had said that 50 per cent of the expenditure relating to shore-based fire-fighting installation and 50 per cent of the berth and fall expenditure of shore cranes should be taken as input cost for fixation of cargo handling charges.

The official said the Ministry has rejected the suggestion to make the private terminal operators compensate the port as part of the License Agreement, if the operator benefits through reduction in vessel related charges.