India: Fiscal Incentives Are Hard to Come By

by Sunil Damodar

Sunil Damodar is a principal at EME Ltd., a country research and market data firm specializing in India. Telephone: (201) 945-7288.

Item: Great Eastern Shipping Co.

Ltd., the premier private sector shipping company in India, recently found its fleet expansion plans hobbled by domestic fiscal constraints. The Indian government cut the company’s request for clearance of a foreign currency borrowing program by a third. Great Eastern will now be raising only $50m instead of the originally planned $150m from foreign markets.

Item: The recent fiscal 1996 budget issued by the third administration to govern India this year (an election year) removes tax incentives affecting net profits and cashflows of local shipping companies. This is part of a tough, albeit fiscally prudent, plan to bring the entire corporate sector within the tax net.

Item: Collapsing infrastructure at the Calcutta port traps seven ships within its dock system. According to reports, no ships can now enter the Netaji Subhas and Kidderpore docks.

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