India Launches New Shipbuilding Financial Assistance and Development Schemes
The Indian government has announced operational guidelines for two significant initiatives aimed at revitalizing the domestic shipbuilding industry: the Shipbuilding Financial Assistance Scheme (SBFAS) and the Shipbuilding Development Scheme (SbDS). Both schemes are set to remain in effect until March 31, 2036, with a potential extension until 2047. Union Minister of Ports, Shipping & Waterways, Sarbananda Sonowal, emphasized that these guidelines will establish a stable and transparent framework to enhance domestic shipbuilding, thereby fostering both forward and backward linkages within the industry.
The SBFAS, with a total budget of Rs 24,736 crore, will provide financial assistance ranging from 15% to 25% per vessel, depending on the vessel category. This scheme introduces a tiered support system for various types of vessels, including small normal, large normal, and specialized vessels. Financial disbursements will be linked to specific milestones and secured by appropriate instruments. Additionally, the scheme incentivizes series orders, encouraging shipbuilders to undertake multiple projects.
A key feature of the SBFAS is the establishment of a National Shipbuilding Mission, which aims to ensure coordinated planning and execution of shipbuilding initiatives across the country. Furthermore, the introduction of a Shipbreaking Credit Note will allow ship owners who scrap vessels at Indian yards to receive a credit equivalent to 40% of the scrap value. This initiative links ship recycling with new ship construction, promoting a circular economy approach. To enhance governance and ensure efficient use of public funds, independent valuation and milestone-based assessments will be mandatory.
Long-term Growth and Infrastructure Development Under SbDS
The Shipbuilding Development Scheme (SbDS) complements the SBFAS with a budgetary allocation of Rs 19,989 crore, focusing on long-term capacity and capability enhancement in the shipbuilding sector. This scheme aims to develop greenfield shipbuilding clusters, modernize existing brownfield shipyards, and establish an India Ship Technology Centre under the Indian Maritime University. The center will support research, design, innovation, and skills development in the maritime field.
Under the SbDS, greenfield shipbuilding clusters will receive 100% capital support for essential maritime and internal infrastructure through a 50:50 Centre-State special purpose vehicle. Existing shipyards will be eligible for 25% capital assistance for the expansion of critical infrastructure, including dry docks, shiplifts, fabrication facilities, and automation systems. Disbursements under this scheme will also be milestone-based and monitored by independent evaluation agencies to ensure accountability.
Additionally, the SbDS includes a Credit Risk Coverage Framework, which offers government-backed insurance for pre-shipment, post-shipment, and vendor-default risks. This framework aims to improve project bankability and enhance financial resilience within the shipbuilding sector. Over the next decade, the SBFAS is projected to support shipbuilding projects worth approximately Rs 96,000 crore, stimulating domestic manufacturing and creating employment opportunities across the maritime value chain.
