India Approves ₹44,700 Crore Shipbuilding Boost to Strengthen Maritime Industry
New Delhi-The Ministry of Shipping has formally announced the specifications of two flagship programmes of shipbuilding with a total value of ₹44, 700 crores, meant to rejuvenate the local ship building industry, lure foreign investment in the sector and empower the Indian maritime ecosystem.
These schemes are the Shipbuilding Financial Assistance Scheme (SBFAS) ₹ 24,736 crore and the Shipbuilding Development Scheme (SbDS) ₹ 19,989 crore. Collectively, the schemes are meant to create stability in the policy, promote mass production and make India a competitive shipbuilding destination in the world.
The government under the SBFAS will be providing financial aid of between 15% to 25 % per vessel depending on the type and size of the vessel. There will be grades in incentives on small, big, and specialised vessels, and the disbursement of funds will be based on specified milestones in construction and with adequate security arrangements. Other incentives towards series production orders have been implemented in order to encourage economies of scale and operational efficiency.
The Shipbuilding Development Scheme (SbDS) is an infrastructure creation and modernisation scheme. New greenfield clusters of shipbuilding will be provided with 100 % capital base-sharing maritime and internal infrastructure via 50:50 Centre-State Special Purpose Vehicle (SPV). The existing shipyards will have access to 25% capital subsidy to expand brownfields, including essential facilities like dry docks, shiplifts, fabrication facilities, and high automation equipment.
According to Union Minister of Ports, Shipping and Waterways Sarbananda Sonowal the new guidelines have provided a clear and predictable framework that will revive the Indian shipbuilding industry. He pointed out that the policy would enhance forward and backward industrial connections, boost the Make in India operation, entice worldwide investment, and back the dream of Viksit Bharat and Aatmanirbhar Bharat.
One of the interesting aspects of the SBFAS is the suggested National Shipbuilding Mission, which is expected to provide the way of the coherent planning and efficient execution of shipbuilding programmes. The scheme also facilitates the introduction of a Shipbreaking Credit Note, with ship owners being able to claim credits of 40% of the scrap value when they recycle the vessels at the Indian yards. The measure makes recycling of ships associated with the building of new vessels to encourage a sustainable environment and a circular economy.
Over the next decade, SBFAS is expected to facilitate shipbuilding projects valued at nearly ₹96,000 crore, while generating significant employment opportunities across the maritime value chain.
Meanwhile, the SbDS focuses on long term capability creation, such as creating an India Ship Technology Centre to facilitate research, design, innovation, and skill generation. The scheme also has a Credit Risk Coverage Framework which provides government-supported pre-shipment, post-shipment, and vendor-default risk insurance to facilitate greater project bankability and financial stability.
