In order to achieve the Objectives laid down in vision documents MIV 2030 and MAKV 2047 for the Indian Shipbuilding and Shipping, last month the Government, in a landmark decision, has approved a comprehensive package of ₹ 69,725 Crores to revitalize India’s shipbuilding and maritime ecosystem. The package introduces a four-pillar approach designed to strengthen domestic capacity, improve long-term financing, promote Greenfield and Brownfield shipyard development, enhance technical capabilities and skilling, and implement legal, taxation, and policy reforms to create a robust maritime infrastructure.
Shipbuilding Financial Assistance Scheme (SBFAS): The Pillar 1 of the Maritime ecosystem development is the new SBFAS with a total corpus of ₹24,736 Crores extending until 31st March 2036. The scheme aims to incentivize Ship building in India and also includes a Ship breaking Credit Note Scheme with an allocation of ₹ 4,001 Crores. Under this policy, eligible vessels will receive subsidies ranging from 15% to 25%, based on vessel type/size, price and category. Once the guidelines are approved, the old SBFA Policy valid until 31.03.2026 will merge with the new SBFAS and all outstanding payments to shipyards will pass on to the new scheme.
The new features of the policy compared to previous SBFAP includes following:
- Financial assistance is linked to domestic content, with full financial assistance for vessels having domestic content of 40% or more, and those below 30% will not be eligible for financial assistance. The financial assistance for vessels having domestic content between 30% and 40% shall be pro-rated.
- A Ship Recycling Credit Note Scheme offering credit note up to 5% of new vessel’s cost, based on 40% of scrap value, and is transferrable and valid for 3 years.
- Establishment of National Shipbuilding Mission (NSbM) for the Administration of the Mission. The Mission shall be governed by Inter-Ministerial Governing Board which will be supported by an Advisory Group comprising Academic, Industry and Government Stakeholders and a Mission Director.
- Maritime Development Fund (MDF): The Pillar 2 of the Maritime ecosystem development is the Maritime Development Fund. The MDF has been approved with a corpus of ₹25,000/- Crores to provide long-term financing for the sector from FY 2026 to FY 2036. This includes a Maritime investment Fund (MIF) of ₹20,000/- Crores with 49% or ₹ 9800/- Crore participation from the Government of India and an Interest Incentivization Fund (IIF) of ₹ 5,000 Crores to reduce the effective cost of debt and improve project bankability.
- Shipbuilding Development Scheme (SbDS): The Pillar 3 of the Maritime ecosystem development is Shipbuilding Development Scheme with a budgetary outlay of ₹19,989 Crores. The scheme aims to expand domestic shipbuilding capacity to 4.5 million Gross Tonnage annually, support mega shipbuilding clusters, infrastructure expansion, establish the India Ship Technology Centre under the Indian Maritime University, and provide risk coverage, including insurance support for shipbuilding projects. It includes the following:
- Greenfield capacity expansion: Establishment of three numbers Greenfield mega clusters with total outlay of ₹ 9930 Crores. The other component of funding/ support will be provided by the coastal States. The scheme will support creation of new shipbuilding mega clusters through infrastructure support for common marine facilities and land side connectivity.
- Brownfield capacity expansion: Brownfield capacity expansion with total outlay of ₹ 8,261 Crores. The scheme will support capacity expansion of existing shipyards and for creation of new building shipyard. This scheme can be utilized by both public sector and private sector shipyards. Capital support to the extent of 25% of capacity creation will be provided.
- Capability development: Total outlay of ₹ 305 Crores is earmarked for establishment of India Ship Technology Centre (ISTC) under IMU at Visakhapatnam to serve as the Apex body for capability development. Thereafter, Regional capability center’s will be created at each of the new shipbuilding clusters. Initially, ISTC will provide SaaS service to other design companies, coordinate with academia, research labs and industry for test facility use, establish and operationalize new test facilities, etc.
- Shipbuilding Risk coverage: An outlay of ₹ 1,443 Crores has been earmarked for risk related credit covers to shipyards for facilitating shipbuilding. The scheme will cover buyer default before delivery on vessel payment to the extent of 75% of the vessel value, buyer default on delivery installment for 10% of vessel value and vendor default for imported items to the tune of 35% of the vessel value. The National Shipbuilding Mission (NSbM) will oversee the implementation of credit risk covers ensuring effective utilization of funds and meeting objectives.
- Legal, Policy and Process Reforms: The Pillar 4 comprises Legal, Policy and Process reforms which the Government is continuously working to strengthen the India’s Shipbuilding Industry and improve Ease of doing Business.
The overall package is expected to boost shipbuilding capacity, generate jobs, and attract investments into India’s maritime sector. The initiative will strengthen energy and food security and position Aatmanirbhar Bharat as a competitive force in global Shipping and Shipbuilding.
Marex Media
The Author
Vikram Dingley
Director (T&OS), SCI