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Indian shipyards must have a positive net worth if they are to become eligible for exercising a so-called right of first refusal to build/repair ships for government departments/agencies including state-run firms, according to new guidelines issued by the shipping ministry. The shipbuilding policy approved by the cabinet grants a right of first refusal to Indian shipyards on government purchases and ship repairs, whereby local shipbuilders can take up state-funded contracts/works by matching the lowest price offered by overseas entities in a public auction.
The shipyard should have positive net worth during the immediate preceding financial year. In case an Indian shipyard does not have a positive net worth as required during the immediate preceding financial year, it should provide a so-called comfort letter from scheduled banks/ reputed lending institutions indicating to provide necessary financial support (at least 60% of the value of the contract for shipbuilding and 50% of the value of the contract for ship repairs) to execute the project, the ministry wrote in the guidelines issued to implement the financial assistance scheme cleared by the cabinet in December. The scheme took effect from 1 April.
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