India boasts a significant number of seafarers, with over 320,000 at the end of FY25, making up about 16% of the global maritime workforce. However, a stark reality is that only a fraction – roughly 25,000-30,000 – choose to work on Indian-flagged ships. This disparity primarily stems from a less favourable tax treatment compared to their counterparts on foreign vessels, which also puts Indian shipping companies at a competitive disadvantage. Recognising this challenge, the Union government is now actively examining a proposal to either exempt Indian seafarers on domestic ships from Tax Deducted at Source (TDS) or significantly reduce the TDS rate, aiming to level the playing field and inject new life into India's maritime sector.
Currently, most mid-level seafarers employed by Indian companies, earning upwards of ₹24 lakh annually (including bonuses and allowances), fall under the 30% TDS bracket. This effectively makes their take-home pay lower than those on foreign ships, leading many talented Indian seafarers to seek opportunities abroad. This exodus not only deprives Indian shipping lines of skilled manpower but also forces them to increase salaries to attract talent, thereby escalating their operating costs and making them less competitive against international players, even in India's own coastal waters. This situation contributes to a hefty annual freight bill of about $60 billion paid to foreign companies, as 92% of India's imports and exports are currently carried by non-Indian ships.
The proposed tax relief is a strategic move with far-reaching implications. It aligns with the government's ambitious goal of making Indian seafarers constitute over 50% of the global workforce in the next decade, with a specific focus on increasing the supply of officers in maritime trade. By attracting more seafarers to Indian ships and fostering the growth of the domestic shipping industry, India aims to reduce its reliance on foreign shipping lines, retain crucial freight earnings within the country, and ultimately strengthen its position as a global maritime hub. Industry experts and tax leaders alike believe such a targeted exemption would not only ease the financial burden on seafarers but also significantly enhance employment opportunities and bolster India’s overall maritime economic prowess.
