This difference is usually around 15 to 20%, and under the plan, shipbuilders can receive a subsidy of 15 to 25%, depending on the size of the ship and whether it is an environmentally friendly vessel, said TK Ramachandran, Secretary of Ports & Shipping.
The Union Cabinet approved shipping and maritime projects worth about ₹70,000 crore on September 24. The initiative includes a financial assistance scheme for shipbuilding valued at nearly ₹45,000 crore and a maritime development fund of around ₹25,000 crore.
Currently, India has limited shipbuilding capacity, with only a few public and private shipyards like Cochin Shipyard, Pipavav, and L&T.
Countries like Korea, Japan, China, and Vietnam produce far more ships each year. The new scheme will provide subsidies of up to 25% to improve infrastructure at existing shipyards and expand capacity.
The government’s goal is to reduce dependence on foreign vessels. At present, 95% of India’s cargo is carried on foreign ships, highlighting the need for self-reliance in shipping.
Ramachandran stated that India aims to develop its own fleet and shipbuilding capabilities to de-risk its maritime trade.
The government has also granted infrastructure status to certain classes of large ships built or registered in India. This move is expected to facilitate easier financing and promote private investment in the sector.
To further address the lack of financing in shipping, a Maritime Development Fund of ₹20,000 crore has been launched, with the government contributing 49% and the remainder expected from private equity, sovereign funds, and pension funds.
This is projected to attract about ₹1.45 lakh crore in total investments into the shipping sector.
The government aims to break the vicious cycle of limited financing, which has historically restricted ship manufacturing and yard capacity. A dedicated shipbuilding development scheme worth ₹19,989 crore is being set up to create two to three mega shipbuilding clusters in India.
Ramachandran noted that the scheme has already generated strong interest from investors and shipbuilders in countries including the US, UK, Greece, Japan, and South Korea.
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