February 21, 2017
The decision to scrap 4.5% service tax on ocean freight for consignments transshipped from Visakhapatnam and Kolkata ports as the third country imports to Nepal will benefit the trading community of the Himalayan country.
Alternative Exim port
The service tax imposed in June last year was withdrawn vide the Ministry of Finance TRU Circular No.204/2/2017 dated February 16 with immediate effect on goods intended for transshipment to any country outside India.
Trading community of Nepal has hailed the initiative after Nepal Commerce Minister Gauchan Thakali and others pleaded strongly with their counterparts in India that the imposition of service tax on cargo bound to their country would negate the letter and spirit of free trade agreement signed by them.The contention of the traders as well as the Nepali authorities was that the collection of service tax by cargo handling agents in India would ultimately pass on to the importers making the ferrying of goods very expensive. The Federation of Nepalese Chambers of Commerce and Industry and the Nepal Freight Forwarders’ Association have been demanding several initiatives to make Visakhapatnam an alternative port to Kolkata for them. Following problems faced for shipment of cargo from Kolkata Port, on a request by Nepal, the Ministry of Commerce declared Visakhapatnam Port as an alternative Exim port last year following which the Visakhapatnam Port has been trying to create the required ecosystem to facilitate movement of cargo.
Fertilizers, coal, project cargo and garments are expected to be moved from Visakhapatnam to Nepal via Birgunj. Several high-level delegations from Nepal frequented Visakhapatnam and inspected the facilities on rake availability with the railways and Container Corporation of India (CONCOR).
Visakha Container Terminal Private Ltd, a BOT operator of Visakhapatnam Port, has developed a 24x7 all-weather facility here with deep draft to handle large shipping lines including those belonging to Maersk.
Visakhapatnam Port Deputy Chairman P.L. Haranadh told The Hindu that they were expecting trade to Nepal to pick up shortly with talks in progress to introduce a box train to Birgunj Inland Container Depot.
Government-owned Nepal Transit and Warehousing Company has also been offered land for building a warehouse after the Nepal Rastra Bank has already issued a notification for payments. A proposal to open the Nepal’s Consulate General Office in Visakhapatnam is also under consideration to facilitate speedy clearances instead of depending on the consul officials in New Delhi.