Shipping cos not hiring trainees face Rs 20-lakh fine

NEW DELHI: Shipping firms that do not have at least 15% of their crew as trainees will be liable for a penalty up to Rs 20 lakh per vessel. They may even lose tax benefits from next year. The government has made it mandatory for shipping companies availing tonnage tax benefits to employ trainees passing out from Indian maritime academies. Shipping firms pay only 5% income tax under tonnage tax regime (TTR) instead of the usual 30% corporate tax.

To avail TTR, shipping firms need to comply with two conditions: invest 20% of their book profits towards a fund for fleet expansion and have 15% of their employees on board as trainees. Unable to meet the second condition, over 50 firms are willing to pay the fine to avoid paying corporate tax.

Earlier, companies including Shipping Corporation of India and GE Shipping had appealed to the government for a waiver of the minimum training requirement. ���Almost all the large players including SCI and GE have appealed to the government,��� said a senior official of the Maritime Training Trust.

The government had issued an order in December 2007 asking all Indian shipping firms to have 15% of personnel under training on board. However, the notice was issued with retrospective effect from April 2007. ���We had informed the companies in March 2007 that this conditions are mandatory. However, the companies did not comply with it,��� said a senior government official. It is difficult to reverse the order issued in December, he added.

In order to enforce its December 2007 decision, the government has decided to impose a fine on every vessel where the condition is not met. The final amount of penalty is yet to be fixed though the government has indicated a broad range. ���Large companies will be affected adversely as they usually have a huge fleet over 75 vessels. This would mean an additional expenditure of Rs 15 crore for a company with minimum 75 ships,��� a senior shipping analyst said.