India: Government makes training needs for shipping firms tougher

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

31 May 2009

Officers being trained on ships covered by the tonnage tax scheme have been exempted from paying a training fee to the shipping firms, according to revised rules notified by the government recently. The government has also reset the administrative cost, now to be paid by the shipping firm alone, at Rs500 per month per trainee officer, irrespective of the size of the ship. The penalty for not meeting the minimum training requirements has been set at Rs5,000 for each day of shortfall for ships with a capacity of more than 500 tonnes, and at Rs1,500 for ships with lesser capacity.
“The government has abolished the training fee,” wrote Ashima Gupta, a deputy director general of shipping, in a recent circular. The director general of shipping is India’s maritime regulator.
Under the tonnage tax system introduced in April 2004, the levy is based on the cargo carrying capacity of a ship, rather than the traditional corporate tax system. The tax burden under this is 1-2% of operating revenues, compared with 30-35% under corporate tax. In turn, the shipping firms opting for the system had to commit to train at least one officer for a complement of 10, based on the safe manning, or staffing, requirement. The training requirement was included in the tonnage tax rules to overcome a shortage of officers faced by Indian shipowners. A carrier not meeting the minimum requirements for five consecutive years would be expelled from the tonnage tax scheme.
The government had adopted a two-tier training fee structure based on the cargo carrying capacity of qualifying ships. A trainee officer on a ship with a capacity of more than 500 tonnes was required to pay the firm a fee of Rs10,000 a month, subject to a maximum fee of Rs2 lakh. For ships with capacity of less than or equal to 500 tonnes, the fee was Rs3,000 a month, subject to a maximum of Rs1 lakh.
In addition to waiving the fee, the government has increased the minimum training requirement for a qualifying ship to 1.5 officers for a complement of 10, Gupta wrote in the circular. Besides, the trainee officers now will not have to pay the administrative cost prescribed earlier by the government. This cost was fixed at 10% of the total fee, and was paid by the shipping firm and the trainees in equal proportion. The fee and administrative cost had to be deposited into the Maritime Training Trust set up by the shipping firms that had opted for the tonnage tax scheme.

Source: Livemint