Indian shipyards offer cost effective ship repair and maintenance services

India has six major shipyards with a turnover of nearly $2 billion.



By H.P. Ranina

Published: Sat 20 Aug 2022, 6:45 PM

Last updated: Sat 20 Aug 2022, 6:46 PM

Question: I have been offered a job in India by a company which repairs ships and other vessels. Will it be a wise decision to take up this assignment?

The shipping industry in India is set for a new phase of growth. Foreign countries are increasingly using Indian shipyards for service and repair of modern ships. Even naval warships are being docked in India for repairs and allied services. Indian shipyards offer wide ranging and cost effective ship repair and maintenance services. These are provided by using advanced maritime technology platforms. Customised services are being offered in a cost effective manner. This has brought global recognition to the Indian shipbuilding and repair industry. Currently, India has six major shipyards with a turnover of nearly $2 billion. These shipyards have their own design centres which are capable of making every kind of state-of-the-art ships.

Recently my wife was in India and she had to pay charges for cancellation of air tickets and hotels. She was levied Goods & Services Tax on such cancellation charges. Is this legal and justifiable?

Circulars have been issued by Government authorities to clarify that GST is leviable on cancellation charges. One of the circulars analyses what constitutes transportation service. Such service begins with the booking of the travel ticket and continues till the passenger reaches his destination. If at the time of booking consideration is paid and the passenger has the facility or option to cancel the booking for which a fee or charge is to be levied, GST would become leviable on the cancellation charge. This would be so in the case of air travel or rail travel where the applicable GST rate is 5 per cent. In the case of hotel accommodation, cancellation charges will attract GST at the same rate at which it is applicable on the room rate which goes up to 18 per cent in the case of deluxe rooms. GST is exempt on non-air conditioned passenger transport services. Another circular issued by the authorities has clarified that if seller of a property had taken a deposit from a prospective buyer and such transaction is subsequently cancelled, no GST is payable on the earnest money which is forfeited.

The present geopolitical situation has thrown the electronic industry in a tizzy on account of acute shortage of semi-conductor chips. The Indian Government has announced plans for encouraging setting up of units by foreign investors in India. Is there any progress on this front?

One of the well known Indian conglomerates is finalising plans to set up facilities for manufacture of semi-conductor chips and display glass. The project would come up in a State which has stable policies and is prepared to give a substantial subsidy on the project cost. Taiwan today is the major producer of semiconductor chips in the world and this has happened because it gave a ninety percent subsidy on the project cost to foreign investors who set up their facility in that country. The Indian conglomerate which is in the process of setting up the display glass and semiconductor chip manufacturing facility is proposing to invest $20 billion over a period of time. The location of the facility will be finalized once any State Government agrees to give the fiscal incentives. The location in the State will then be selected in close proximity to universities, infrastructure and water facilities. Proximity to a university is important because substantial research has to be carried on for this technology driven project.

H. P. Ranina is a practicing lawyer, specialising in tax and exchange management laws of India. Views expressed are his own and do not reflect the newspaper’s policy.


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