The shipping ministry has proposed a maritime development cess of Rs 50 per tonne of cargo to finance the Sagar Mala project. The cess will be credited to the Consolidated Fund of India and administered by the finance ministry.

Indian ports handled 313 million tonnes of cargo in 2002-03, and the government expects to garner at least Rs 1,567 crore (Rs 15.67 billion) from the levy. The cess will be imposed on shipping companies, but the burden will be borne by exporters and importers.

The Sagar Mala project will require innovative funding because within three months of its announcement on August 15, the planned outlay for the project has jumped 10 per cent. The government has also identified the bodies responsible for the execution of the project. 

A committee headed by the shipping secretary and comprising representatives from the ministry of finance, commerce and environment, will evaluate and approve investment proposals. It will have the power to award projects costing less than Rs 500 crore (Rs 5 billion). The committee will also be authorised to grant environmental clearance.

A Sagar Mala Development Authority will be set up to channel budgetary support and implement assigned projects. To start with, it will be responsible for setting up major ports. It will also float special purpose vehicles for providing port connectivity, in which ports will be allowed to hold up to 30 per cent stake.

The authority will also be responsible for development and maintenance of national sea lanes. A separate fund will be established for development of coastal shipping and inland water transport infrastructure. The government has promised to contribute 40 per cent of the total investment in inland water transport.

With the announcement of the Sagar Mala project, the maritime industry has come into the limelight for the first time. The aim is to enhance capacity, efficiency and connectivity at ports, boost shipping tonnage under Indian flags, increase the share of inland waterways, and promote coastal shipping.

For this, the government has set aside Rs 55,000 crore (Rs 550 billion) for the ports sector, Rs 25,000 crore (Rs 250 billion) for the shipping sector and Rs 26,000 crore (Rs 260 billion) for inland water transport and coastal shipping.

Shipping levy

• The government expects to garner at least Rs 1,567 crore from the maritime development cess.
• The cess will be imposed on shipping companies, but the burden will be borne by exporters and importers.
• The Sagar Mala project will require innovative funding because the planned outlay for the project has jumped 10 per cent.