India's interim budget 2009/10 dishearten shippers

Indian shipping firms were disappointed with the interim budget 2009/10 presented today as it did not announce any sops to boost the ailing sector.

Indian shipping firms were disappointed with the interim budget 2009/10 presented on Monday as it did not announce any sops to boost the ailing sector.

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Shipping firms had been seeking exemption from 12 taxes including tax on profit from sale of vessels, interest income from compulsory reserve and seafarer's income, none of which has been addressed.

This year, however, they only sought exemption from service tax for some 27 input services.

"Unfortunately, nothing has come for shipping. There's no positive for the sector," Yuddhisthir Khatau, managing director at Varun Shipping Co , said.

Pranab Mukherjee, in his speech, highlighted the steps taken by the government in December and January to boost a slowing economy, but was mute on any new fiscal measures including tax exemptions, duty or interest rate cuts.

The budget disappointed shippers sending shares in the firms down 3-5.7 percent in a weak Mumbai market.

Great Eastern Shipping ended down 4.5 percent at 190.05 rupees, Mercator Lines fell 3 percent to 30.30 rupees and Essar Shipping finished down 5 percent at 31.7 rupees, while Varun Shipping fell 2.45 percent to 45.8 rupees.

The industry has been reeling under poor freight rates as plunging demand, recession in major world economies and tight lines of credit stifled trade.

The Baltic Exchange's sea freight index <.BADI>, which gauges costs to ship key resources such as iron ore, cement, grains and coal on major export routes, slumped to a 9-year low in November.

"We have been shouting hoarse but I don't think anything has come out," S.S. Kulkarni, secretary general of Indian National Shipowners' Association, said.

"Shipping industry has a small size. It doesn't affect the overall economy unlike auto, manufacturing sectors, which stimulate the economy directly. So, they left it untouched."