Page 55 - Banking Finance March 2025

FEATURES

India sets sail to become a global

shipbuilding power

T he Budget 2025-26 has set the stage for a major Fund, backed by government and private investors, will

transformation in India's shipbuilding sector,
expand financing options for the sector. All these measures
will not only enhance the overall shipbuilding ecosystem but
aiming to make the country a global player. By
addressing cost disadvantages and opening new
in India.
growth opportunities, these initiatives are targeted towards also trigger the revival of the private shipbuilding industry
boosting shipbuilding, creating jobs, and reviving India's
maritime industry. With policy support now in place, the coastal States must
make efforts to capitalise on these opportunities. The
India's shipping sector heavily depends on foreign owned Economic Survey 2024-25 has emphasised the need for state
vessels, with only 8 per cent of cargo carried by Indian led initiatives to address fundamental challenges in doing
flagged ships. The fleet is ageing, and high manufacturing business.
costs make commercial shipbuilding costly. To address these
challenges, the government has announced key policy State Reforms
reforms in the Budget under a revamped Shipbuilding Over the past decade, the Centre has introduced key
Financial Assistance Policy. reforms, simplifying taxation laws, streamlining labour
regulations, and decriminalising business laws. Building on
One major reform is the introduction of Credit Notes for these efforts, coastal State governments must take
shipbreaking in the Indian yards to encourage sustainable proactive steps to enhance further the ease of doing
ship recycling and create demand for new ships. To further business through deregulation.
support the sector, the government is developing
Shipbuilding Clusters. These hubs will bring together Establishing single window clearance systems, fast-track
infrastructure, skilled workers, and new technologies, approvals, better shipyard connectivity, flexible labour hiring
enabling India to scale up production and expand into policies and speedy land allocation systems will boost
building different types of ships. investor confidence.

The Budget has also extended the basic customs duty Setting up state level shipbuilding investment boards and
exemption on shipbuilding inputs for an additional 10 years. collaborations with global leaders like South Korea and Japan
This will lower the input costs for the sector. will help attract investments in greenfield shipyards for
enabling efficient production of world-class ships. Notably,
Another key decision is the inclusion of large ships in the Gujarat and Andhra Pradesh have already made significant
Infrastructure Harmonized Master List. This policy will be strides in this direction, positioning themselves as leading
game changer, allowing access to long-term financing and destinations for shipbuilding investments.
attracting private investment into the industry.
Complementing the measures taken by the Union and the
Additionally, the Rs. 25,000 crore Maritime Development State governments, the shipyards should focus on aligning

BANKING FINANCE | MARCH | 2025 | 49