Local shipbuilders are staring at uncertainty as the Customs duty exemption on import of raw materials, machinery and equipment used in the construction of ships will end on 31 March.
“The Custom duty withdrawal on raw materials and machinery/equipment will result in a substantial increase in shipbuilding costs by some 4-6%,” said an executive with a private shipyard.
“The yards booking orders now do not know what will happen to Custom duty on import of raw materials and parts. Because of this, there is uncertainty,” he said, adding that “shipyards are in a dilemma to quote and compete for international orders”.
The exemption from Customs duty for imports by shipyards for use in the construction and repair of vessels was extended from 1 April 2023 to 31 March 2025 for shipbuilding and till 31 March 2024 for ship repairs.
In the Union Budget 2024, the Customs duty exemption for import of parts used in ship repairs was extended for three years.
But, an extension of duty exemption has not been granted for shipbuilding so far.
The local shipbuilding industry has been lobbying the government to extend the Custom duty exemption for the import of raw materials and parts used in shipbuilding for 10-15 years to help Indian yards “sustain and compete globally”.