The Indian government plans to seek Cabinet approval for a policy aimed at increasing its global share in the shipbuilding market.

The proposed policy is dubbed Shipbuilding Policy 2.0. It includes a recycling credit note scheme, fixed shipbuilder subsidies, and the establishment of three maritime clusters in Andhra Pradesh, Gujarat, and Odisha.

Incentives:

The shipbuilding policy 2.0 will provide graded subsidies to shipyards:

• 20 percent for standard vessels
• 25 percent for special category ships like oil, gas, and chemical tankers, as well as container ships
• 30 percent for eco-friendly vessels and those with advanced technology
• Fleet owners will receive a 40% credit note for dismantled ships at Indian breaking yards. The credit can be used to offset the cost of new vessel construction.

These subsidies will be fixed for a period through March 2034, with a potential extension until 2047, to offer long-term stability for shipyards when securing orders.

Objective:

India holds less than 1 percent of the global shipbuilding market but aims to rank among the top 10 by 2030 and the top five by 2047.

The new policy aims to encourage both domestic and international fleet owners to recycle ships in India and build new ones locally.

It addresses the shortcomings of the current scheme and boost local shipbuilding.

Backdrop:

As part of Maritime India Vision 2030, India has set key targets to promote domestic shipbuilding, repair, and recycling. To achieve this, the country aims to harness domestic demand for shipbuilding and repair by effectively utilizing Atmanirbhar PPP provisions and RoFR rules.