The government is working on a multi-pronged strategy to boost the shipbuilding industry’s capacity expansion and growth plans in a holistic manner with an eye on becoming the fifth largest shipbuilding nation by 2047, according to a senior government official.
The target entails expanding existing yards, reviving and bringing bankrupt yards back to production through the Insolvency and Bankruptcy Code (IBC) and setting up new yards.
The current shipbuilding financial assistance scheme will end in 2026 after a ten-year run and the financial assistance is currently at 14 percent for normal ships and 20-30 percent for green ships.
The govt is considering to revise the percentage of financial assistance so that it is fixed at an appropriate level and probably kept stable over a period of time and not in a reducing manner, so that the industry is able to factor this into their plans and accordingly take investments commitments.
Further, the proposed Maritime Development Fund (MDF), with an initial corpus of Rs25,000 crores, will provide equity support to the shipyards for new ventures or for expansion of existing ventures.
The government will be the anchor for the MDF. It will tap into the surplus funds of major ports to become investors into the MDF, besides other non-banking finance companies (NBFC’s), and financial institutions, both domestic and foreign.
The Sagarmala Development Company Ltd, which recently got government approval to convert itself into a non-banking finance company (NBFC) and play the role of a maritime focussed lending agency, will provide loans to shipyards.
The Ministry of Ports, Shipping and Waterways, is also working with the Ministry of Commerce and Industry and the state governments on setting up mega shipbuilding and ship repair clusters.
This involves identifying large chunks of land with a seafront that can be developed as shipyard and ship repair clusters. “The initial infrastructure requirements for the clusters would be developed by the Union government in partnership with the state governments to make it a plug and play kind of facility, wherein shipbuilders can come in and set up quickly.
Odisha, Andhra Pradesh, Gujarat, Maharashtra and Tamil Nadu have shown keen interest in this model. These five states are actively working and have also identified a couple of potential locations and in a couple of states the techno economic feasibility process has already started which will come up with specific proposals on where it is possible, according to the official sources.
These locations are planned to be developed using the existing schemes of the government such as the National Industrial Corridor Development Programme and the new Industrial Parks scheme.
The Ministry of Ports, Shipping and Waterways is also working with the state governments to formulate a dedicated policy for supporting shipbuilding and repairs.
The government is also looking at some of the leading players within the Indian industry and are also in discussions with countries which are leaders in the shipbuilding sector to add capacities.
A new scheme for supporting the capacity and capability expansion in the shipbuilding sector is also under consideration. This includes having a common design and testing centre, a common infrastructure such as a heavy lift ship to help facilitate modular ship manufacturing and paid apprenticeship in shipyards to promote skilling.
Given India’s growth trajectory, estimates suggest that, in the next couple of decades, the country would be accounting for roughly 20-25 percent of the global seaborne trade.
The government’s vision is how do we expand the shipbuilding capacity so that whatever ships are needed for the country, we are able to manufacture it to a large extent within the country, he noted.
