Government Amplifies Financial Support to Boost Green and Indigenous Shipbuilding

Union Minister Sarbananda Sonowal announced substantial financial support for green fuel-propelled vessels and indigenous shipbuilding. Key initiatives include 30% assistance for green fuel vessels, revised assistance for specialized ships, infrastructure status for shipyards, and strategic policy changes to foster local shipbuilding against global competition.

Union Minister of Ports, Shipping and Waterways, Sarbananda Sonowal, informed the Lok Sabha on Friday that the government is offering financial assistance of 30 percent for vessels propelled by green fuels such as Methanol, Ammonia, or Hydrogen fuel cells. Moreover, the Shipbuilding Financial Assistance Policy (SBFAP) scheme is providing 20 percent assistance for electric or hybrid propulsion systems.

In a bid to boost indigenous shipbuilding with modern technology, the ministry has amended the SBFAP guidelines. This includes increased financial aid for specialized vessels like wind farm installation units and sophisticated dredgers, surpassing the Rs 40 crore limit set for non-specialized ships. Sonowal urged entities involved in shipbuilding to comply with the Government of India Public Procurement (Preference to Make in India) Order, 2017, which mandates that ships costing less than Rs 200 crore be procured from Indian shipyards.

The Ministry of Ports, Shipping, and Waterways has granted infrastructure status to shipyards through Gazette Notification No. 112 dated April 13, 2016, defining facilities involved in shipbuilding, repair, and breaking activities. This status allows Indian shipyards to access cheaper long-term capital, minimize cost disadvantages, and invest in capacity expansion, thus bolstering the industry. In November 2021, the government released Standard Tug Designs of five variants for major ports to procure tugs from Indian shipyards.

On May 19, 2016, guidelines were issued for evaluating and awarding tenders for new shipbuilding orders by government agencies, including Public Sector Undertakings. These guidelines grant qualified Indian shipyards the "Right of First Refusal," enabling them to match the lowest price offered by foreign shipyards, aimed at boosting shipbuilding activities domestically. Further, the ministry revised the hierarchy of the Right of First Refusal on September 20, 2023, promoting Indian-built, Indian-flagged, and Indian-owned vessels over foreign alternatives.

The SBFAP scheme aims to provide a level playing field for Indian shipyards against foreign competitors for domestic and international shipbuilding orders, covering contracts signed from 2016 to 2026. Both public and private shipyards, including Cochin Shipyard Ltd, Chowgule Shipyard, Mazagon Dock Shipbuilders, and Garden Reach Shipbuilders, have secured numerous orders under this scheme. Since its inception, 39 shipyards have secured a total of 313 vessel orders, valued at approximately Rs 10,500 crore. These shipyards have received Rs 337 crore in financial assistance for delivering 135 vessels to domestic and international owners.

(With inputs from agencies.)