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The recent reduction in the Goods and Services Tax (GST) on bunker fuel may not be enough for local players to effectively sell bonded marine fuel in India, Sing Fuels Pte Ltd director Satnam Singh has told Bunker Index.

On Wednesday, the Ministry of Finance's Central Board of Excise and Customs (CBEC) confirmed that the Goods and Services Tax (GST) on bunker fuel had been lowered for both foreign-going and coastal vessels from 18 percent to 5 percent, but it still remains above the zero percent that was requested in presentations to the GST Council, Singh said.

"[The] 5 percent GST may still be too high to sell bonded bunker fuels in India," Singh commented, adding: "The presentations were made to GST council for 0 percent GST because the fuel is being exported from India."

At the same time, Singh also conceded that the GST reduction came as "a big relief" for bunker suppliers.

"It may not be easy to sell bonded bunkers with 5 percent GST, but it would definitely be much better than 18 percent GST," the Sing Fuels director remarked.

While Singh sees the GST cut leading to bunker prices falling by 10 to 15 percent from current levels, he also noted that the actual impact may only be visible in the near future when the new GST rate is implemented and "bunker enquiries start flowing in again".

Discussing the impact of the 18 percent rate on July 1, Singh told Bunker Index that the Indian bunker industry lost almost 90 percent of its bunker volumes - matching the figure quoted last month by Indian daily Business Line.

"The volumes got divided between Fujairah, Singapore and the major chunk went to Colombo. With the implementation of 5 percent GST, we expect that we may be able to regain at least 40 to 50 percent volumes," he observed.

For Sing Fuels, Singh said "bunker volumes reduced significantly" in India after the GST hike was introduced on July 1, so the company shifted its focus to selling marine gas oil (MGO).

"Since the prices were not very competitive [in India], we started serving our customers at Fujairah, Singapore, Colombo and Trincomalee," he noted.

Singh also explained that, following the GST rate reduction, the company has "no major plans for changes in our business strategy".

"As Sing Fuels has offices globally, we will effectively advise our customers to purchase bunkers from the most cost-effective port," Singh added.

Image: Satnam Singh - director at Sing Fuels Pte Ltd. Credit: Sing Fuels Pte Ltd.