India Offers 15-25% Shipbuilding Subsidies to Boost Industry

The Indian government has announced a significant support policy worth 7 trillion Korean won (approximately 430 billion rupees) aimed at revitalizing its shipbuilding and shipping sectors. This initiative follows the government’s commitment made in September to position India among the top ten shipbuilding nations by 2030. The newly finalized guidelines focus on providing substantial financial assistance for ship construction and the development of shipyards within the country. Notably, South Korean shipbuilding firms, particularly HD Hyundai, have been identified as key partners in this endeavor.

The core elements of the support policy include financial backing for shipbuilding costs and developmental aid for constructing or expanding shipyards. The Indian government will offer cash subsidies ranging from 15% to 25% of construction costs, depending on the type of vessel being built. This support is set to remain in effect until March 2036. Among the vessels eligible for subsidies are Very Large Crude Carriers (VLCCs) and Suezmax-class ships, which are crucial for transporting crude oil. As the world’s third-largest oil importer, India plans to order 267 ships, including crude oil carriers, by 2047, further stimulating the domestic shipping industry.

Flexible Contracting and Expanded Support for Shipyards

Initially, the subsidy program required competitive bidding among multiple shipyards for eligible ship orders. However, the new guidelines now allow for direct contracts with specific shipyards, streamlining the process. Additionally, the government has lifted previous restrictions that prevented overlapping support from both central and state governments, enhancing the financial viability of shipyard projects.

With these changes, HD Hyundai is poised to accelerate its plans for establishing a new shipyard in Tamil Nadu, southern India. This development is expected to bolster the company’s operations and contribute to India’s growing shipbuilding capabilities. Currently, India’s share of the global shipbuilding market stands at a mere 0.06%, highlighting the potential for growth in this sector.

India Invests $5.4 Billion to Boost Shipbuilding Industry, Challenging Global Competitors

Industry analysts believe that the Indian government’s generous support measures will significantly mitigate the risks associated with initial investments and securing order volumes for South Korean companies. A source from the industry remarked that India’s demand for domestically ordered ships, combined with its low labor costs, positions South Korean shipyards to effectively compete with Chinese counterparts through collaboration with India.

As the Indian government implements this ambitious support policy, the shipbuilding landscape is set to undergo a transformative shift, potentially establishing India as a formidable player in the global maritime industry.