Sri Vijaya Puram, April 7: The bunker fuel price in the Islands have risen steeply within a short period of time with an increase of over 100%, significantly impacting the vessel operations. The Bunker fuel price which was Rs 86 per litre upto 15th of March 2026 was hiked to Rs. 123.53 per litre between 16-31 March 2026. The cost was further hiked to Rs. 176.71 per litre from 1st of April 2026.
The marine fuel constitutes approximately 30% of operating costs. The above increase has compelled operators to revise freight rates and passenger tariffs directly affecting the supply of essential commodities from mainland, inter-island connectivity and overall cost of living in the Islands.
Considering the exorbitant hike in bunker fuel price, the Andaman Ship Owners Association has written to the Chief Secretary requesting rationalization on Marine Bunker Fuel (HFLS/HSD). Shri Mohamed Hashim Jadwet, President of the Ship Owners Association in the representation mentioned that marine fuel constitutes approximately 30% of operating costs. The above increase has compelled the operators to revise freight rates and passenger tariffs.
The marine sector remains the primary logistical lifeline of the Andaman & Nicobar Islands, supporting both cargo and passenger movement, including services linked to the Directorate of Shipping Services. While the Administration has taken progressive steps to support aviation and retail sectors through VAT rationalisation, the marine sector despite its critical role continues to be subject to a significantly higher tax burden. In the present scenario of sharply increased base fuel prices, this further escalates the operational costs.
The Ship Owners Association has this requested the Chief Secretary to consider rationalization of VAT on Marine Bunker Fuel and bring it at par with other essential sectors i.e. 1%. At present the VAT structure for retail fuels (Petrol & Diesel) is 1%, which is the same for Aviation Turbine Fuel (done to support connectivity), while the VAT structure for Marine Bunker Fuel is 8%.
Rationalising the VAT structure of Marine Bunker Fuel to 1% would help stabilize freight and passenger costs, reduce pressure on essential commodity prices and support the sustainability of maritime operations in the geographically isolated region of A&N Islands, added the President of the Ship Owners Association in the representation.