India exempts very low sulphur fuel oil from import tax

Essar Shipping

01/02/2020 14:52

NEW DELHI, Feb 1 (Reuters) - India has abolished import tax
on very low sulphur fuel oil (VLSFO) used by ships, according to
federal budget documents for 2020/21, to reduce costs for local
shipping companies.
    International Maritime Organization (IMO) rules that took
effect on Jan. 1 require ships to use fuels with sulphur content
of no more than 0.5%, down from 3.5%, unless they are equipped
with exhaust-cleaning systems known as scrubbers.
    Some local refiners including Indian Oil Corp  IOC.NS  and
Hindustan Petroleum Corp  HPCL.NS  have started making VLSFO to
meet demand. The fuel, however, is not available at all Indian
ports, necessitating imports.
    Rahul Bhargava, executive director at Essar Shipping
 ESPL.NS , said the tax cut would help cope with demand. "There
is a shortage of fuel for coastal movement of vessels," he said.
    A trade source said foreign vessels normally do their fuel
bunkering at Fujirah and Singapore. "Tax exemption will reduce
the cost and mostly help the local shipping companies".

 (Reporting by Nidhi Verma
Editing by David Holmes)
 ((nidhi.verma@thomsonreuters.com; +91 11 49548031; Reuters
Messaging: nidhi.verma.thomsonreuters.com@reuters.net))