Shipbuilders hopeful for Customs Duty exemption extension in upcoming Budget

NEW DELHI : Indian shipbuilders are facing uncertainty as the Customs Duty exemption on the import of raw materials, machinery, and equipment used in ship construction is set to expire on March 31.“The withdrawal of the Customs duty exemption on raw materials and machinery will lead to a significant increase in shipbuilding costs, estimated at around 4-6%,” said an executive from a private shipyard.

“The current situation leaves shipyards uncertain about the future of Customs duty on imports. This uncertainty poses challenges for shipyards booking orders now,” the executive added. “It puts shipbuilders in a difficult position when quoting prices and competing for international contracts.”

The Customs duty exemption for imports by shipyards, initially extended from April 1, 2023, to March 31, 2025, for shipbuilding, and until March 31, 2024, for ship repairs, has seen mixed outcomes in the Union Budget 2024. While the exemption for parts used in ship repairs has been extended for three years, there has been no announcement regarding the extension of the exemption for shipbuilding.

The local shipbuilding industry has been actively influencing the Government to extend the Customs Duty exemption on raw materials and parts used in shipbuilding for a period of 10-15 years. Industry representatives argue that such a long-term measure is essential for Indian shipyards to remain sustainable and competitive on a global scale.