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Haunted by a high tax regime, comprising 12 different taxes, Indian shipping giant Varun Shipping is actively contemplating moving out of the country in search of greener pastures.
"Even after the Tonnage Tax Act was removed by the government, 12 other taxes like the fringe benefit tax, service tax on dry docking services remain... all together they add up to 5 per cent to the total freight rate. The end user is at loss," Varun Shipping Managing Director Yudhisthir Khatau said.
"This compounded with the removal of restriction on using a foreign-flag vessel in India, is preventing us from having a level-playing field and compete globally on an even keel," said Khatau, who is also the President of Indian National Shipowners Association (INSA).
He was speaking on the sidelines of the company's Q3 results announcement.
Many Indian ships were flagging out primarily because of the high level of taxation in India, he said.
"If this problem is not solved even we may gradually move out. Already we have acquired our eleventh vessel through our Singapore subsidiary," Khatau added.
Already Mercator and Essar shipping companies have established their bases outside the country, by forming subsidiaries to pursue their sea-borne trade.
"We are here inspite of the problems as we are publicly listed in India. So we have moral responsibility towards our share holders," he said.
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