Kochi: Cochin Shipyard chairman, Commodore K Subramanian (Retd), has decried the hefty tax regime on shipyards and their ancillaries, that has rendered them uncompetitive in the international market.
“Indian shipyards, small fabricators and other ancillaries are grappling with service tax notices running into millions of rupees,” he said. “They are also burdened with high service tax that threatens their very survival. If ancillaries are forced to shut down their operations due to the inordinate tax burden, shipyards will be immediately hit.
“There is great potential for the shipbuilding sector in the Prime Minister’s ‘Make in India’ programme, and the Shipping ministry has been trying to provide shipbuilding opportunities to Indian shipyards by trying to source domestic requirement of ships from them. But when the industry is closely competing with international yards to secure global tenders, the stringent tax regime has been undermining its competitiveness.”
Cmde. Subramanian was in favour of the ‘cluster’ concept adopted by China in shipbuilding, which would reduce the cost of manufacturing ships. In a cluster concept, suppliers of materials and equipment, and the ancillary units that provide support services, are located in and around shipyards, so that lead time in delivery of materials is reduced to the minimum.
Funds for working capital and expansion were other areas where the industry lacked support, the Cochin Shipyard chief said.