The Ministry of Shipping is actively considering various measures to promote modal shift of cargo from roads to coastal waters not only to decongest roads but more importantly to harness the higher fuel efficiency of coastal movements vis-à-vis roads, as well as to reduce carbon footprint.

One of the issues hindering the growth of coastal shipping has been the levy of customs and central excise duty on bunker fuels which raises cost of transportation. This issue was resolved by Department of Revenue vide Notification No. 31/2014 dated November 11, 2014 by exempting Customs and Excise duty leviable on bunker fuels, namely IFO 180 CST and IFO 380 CST used in Indian flag vessels for transportation of EXIM and empty containers between two ports in India. The exemption has further been extended by Department of Revenue vide Notification No. 46/2015 dated September 17, 2015 to Indian flag ships carrying a mix of EXIM, empty and domestic containers.

 This tax incentive for transportation along the coast will go a long way in enhancing Indian tonnage as well as in promoting development of transportation hubs in India.

Customs and excise duty exemption on bunker fuels reduces coastal shipping costs to promote modal shift and fuel efficiency. The Department of Revenue granted an exemption from customs and central excise duty on IFO 180 CST and IFO 380 CST when used by Indian-flag vessels transporting EXIM, empty, and subsequently mixed EXIM, empty and domestic containers between domestic ports, removing duties that increased bunker fuel costs for coastal shipping.