The 100 per cent deduction would be available for five years beginning thenew financial year. The incentive is expected to generate resources forstrengthening and modernising fleet.

The finance minister said that the incentive was necessary for the shippingindustry as the industry provided transportation sinews to the country'sinternational trade. The industry has strategic relevance too, heunderscored.

The Budget promises policy initiatives for the port and the shipping sectorin the future. It says the government will push programmes forcorporatisation of public sector service providers in the area of portsbesides other areas such as telecommunications and airports.

The Budget has allocated a sum of Rs 4.8 crore for undertaking a feasibilitystudy for the Sethu Samudram Ship Canal project. The project proposes toconnect ports on the East Coast with ports on the western side of thepeninsula. The study will assess the environmental impact of the project.

The existing port infrastructure is insufficient to handle trade flowseffectively. As against the total capacity of 240 million tonnes on March31, 1999, major ports handled 251.7 million tonnes as of March 1999,resulting in pre-berthing delays and longer ship turnaround time.

Further, creation of capacity is being planned according to projectedtraffic requirements. The Ninth Plan envisages an outlay of Rs 9,428 crorefor the port sector with annual plan outlay for 1999-2000 at Rs 1,624 crore.Private sector participation would serve to bridge the resources gap whichis estimated to be about Rs 8,000 crore during the Ninth Plan period.