Govt notifies guidelines for ₹44,700 crore twin shipbuilding initiatives

The Government of India has officially notified detailed guidelines for two shipbuilding initiatives, a combined outlay of over ₹44,700 crore. Released by the Ministry of Ports, Shipping and Waterways (MoPSW), the Shipbuilding Financial Assistance Scheme (SBFAS) and the Shipbuilding Development Scheme (SbDS) aim to transform India into a global maritime powerhouse by reviving domestic yards and deepening industrial linkages.

The Shipbuilding Financial Assistance Scheme (SBFAS), backed by a ₹24,736 crore, is designed to stimulate immediate production. The government will provide financial assistance ranging from 15% to 25% per vessel, utilising a graded support system for small, large, and specialised vessels.

Key features of the scheme include the establishment of a National Shipbuilding Mission, a new body intended to coordinate planning and execution across the sector.

In a move toward a circular economy, ship owners scrapping vessels at Indian yards will receive a shipbreaking credit note worth 40% of the scrap value, which can be applied toward new ship construction. Economically, the SBFAS is projected to support projects worth approximately ₹96,000 crore over the next decade, significantly boosting domestic manufacturing and employment.

While SBFAS focuses on financial incentives for production, the Shipbuilding Development Scheme (SbDS), with an outlay of ₹19,989 crore, targets infrastructure and innovation. The scheme provides 100% capital support for common infrastructure in greenfield shipbuilding clusters through a 50:50 Centre-State special purpose vehicle.

Existing yards are also eligible for 25% capital assistance for brownfield expansions, focusing on critical upgrades like dry docks, shiplifts, and automation. To bolster the technical ecosystem, an India ship technology centre will be established under the Indian Maritime University to lead research, design, and skill development.

Financial resilience and future outlook
To address the financial risks inherent in large-scale maritime projects, the government has introduced a credit risk coverage framework. This provides government-backed insurance for pre-shipment, post-shipment, and vendor-default risks, aimed at improving the bankability of Indian shipbuilding projects.

The Ministry projects that these interventions will increase India’s commercial shipbuilding capacity to 4.5 million gross tonnage per annum by 2047. Both schemes are set to remain valid until March 31, 2036, with an in-principle extension planned through 2047.