Inputs used in ship manufacturing and repair have been exempted from Customs and Central Excise Duties with effect from November 24, 2015. Prior to this exemption, while ships could be imported at almost negligible rates of Basic Customs Duty (BCD) and nil rates of Countervailing Duty (CVD), the inputs used in ship manufacturing and repair attracted normal rates of BCD and CVD.

This put the Indian shipyards, who build ships for the domestic market, at a cost disadvantage. Correction of this inverted duty structure was therefore necessary.

With a view to counter the cost disadvantage to Indian shipyards and to promote indigenous shipbuilding industry as part of the ‘Make in India' initiative, the Ministry of Shipping had taken up this issue with the Department of Revenue, Ministry of Finance.

Ministry of Finance has now exempted Customs and Central Excise Duties on inputs utilized for the purpose of manufacture of ships vide General Exemption Notification Nos. 54/2015-Customs, 55/2015 - Customs, 44/2015-Central Excise and 45/2015-Central Excise, with effect from November 24, 2015.

The exemption will go a long way in creating a proactive environment for the growth of this strategic industry, which will not only generate considerable employment but also play a significant role in fostering economic growth and EXIM trade in the country.
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