With the Centre planning big to develop India’s blue economy by positioning the country as a shipbuilding hub, a new policy is likely to come up in 2026 after the Ship Building Financial Assistance Policy (SBFAP) lapses that year.
The SBFAP, which lapses in 2026, is expected to be replaced by SBFAP 2.0 after 2026, which will have expanded incentives up to 10 years to give impetus to the development of the sector.
The ministry of ports, shipping and waterways, and the ministry of commerce (Department for Promotion of Industry and Internal Trade) are working to incentivise ship manufacturing in the country, and also put in place schemes for sustainable use of ocean resources.
Promoting domestic shipbuilding will help the government achieve its target of reaching 5% of the global market share in shipbuilding. Presently, we have less than 1% of global tonnage, which is abjectly inadequate for sustainable economic growth.
Currently, under the SBFAP, financial assistance is provided to Indian shipyards for shipbuilding contracts signed between 1 April 2016 and 31 March 2026. But the financial assistance has dropped to 11% from 20% in 2016.
There is a proposal to increase financial assistance, especially for green vessels.
A ₹5,000 crore package is also being worked through a new viability gap funding scheme to incentivise the construction of inland vessels, with a plan to extend the support to entities manufacturing sea-bound vessels, including cruise ships, later.
Domestic shipbuilding will not only support Indian ship owners but will also become an alternate shipbuilding destination away from Vietnam, Korea, Japan and China.
Under SBFAP, 313 domestic and export vessel orders were procured by 39 shipyards since the inception of the scheme, with the total value standing at about ₹10,500 crore. These shipyards have received financial assistance of ₹337 crore for delivering 135 vessels to domestic and international shipowners.
The ministry of ports, shipping and waterways recently amended the SBFAP guidelines to include wind farm installation vessels and construction of sophisticated dredgers as specialised vessels eligible for higher financial assistance.
It has also made eligible financial assistance of 30% for vessels using green fuels for their main propulsion, and a financial assistance of 20% for vessels with electric propulsion or hybrid propulsion systems.
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