India Announces A Whopping $2.9 Billion Investment To Boost Maritime Sector

India has announced plans to enhance its maritime sector, focusing on shipbuilding, repair, and overall industry modernisation. Finance Minister Nirmala Sitharaman detailed these initiatives during the budget presentation.

A 250-billion rupee ($2.9 billion) Maritime Development Fund will be established to provide long-term, low-cost financial assistance to the shipbuilding and repair industry.

The government will contribute 49% of the fund, with the remaining funds sourced from major port authorities, other government entities, central public sector enterprises, financial institutions, and the private sector.

The MDF aims to boost the Indian-flagged fleet’s share in global cargo volume to 20% by 2047.

The government plans to develop new shipbuilding clusters, each with a capacity of 1.0 to 1.2 million gross tonnage. These clusters will receive support for infrastructure breakwater construction, capital dredging, and utilities.

A 10-year rent holiday for land will be provided if not offered at a nominal rate. The initiative aims to attract private investment, promote modernisation, and advance green technologies.

The Shipbuilding Financial Assistance Policy has been extended, offering direct financial subsidies totalling ₹18,090 crores to Indian shipyards.

This initiative seeks to help secure orders by offsetting operational cost disadvantages and strengthening the domestic shipbuilding industry.

A new Shipbreaking Credit Note scheme will incentivise ship scrapping by issuing credit notes worth 40% of the scrap value.

These notes can be reimbursed to purchase new, India-made ships, which will renew the fleet with domestically built vessels.

An allocation of ₹6,100 crores has been made to upgrade, modernise, and automate Indian ports. This investment aims to enhance the efficiency, utilisation and overall output of port operations.

The Basic Customs Duty exemption on inputs for shipbuilding and shipbreaking has been extended for 10 years.

This will reduce costs and encourage growth in the industry.

Recognising the importance of skilled professionals, the budget allocates specific funds for training and development. Shipbuilding Capability Development Centres will be established with an outlay of ₹1,200 crores to foster innovative ship design and engineering solutions.

An additional ₹1,040 crores is allocated to support existing and upcoming shipbuilding design and training centres in the private sector.

A support scheme for research and development in ship technology will receive ₹610 crores to promote new and improved shipbuilding technologies.

Infrastructure Harmonised Master List (HML):

Large ships of a certain size will be included in the Infrastructure Harmonised Master List. This inclusion makes them eligible for benefits such as easier access to long-term financing and tax incentives, attracting private investment and enhancing fleet modernisation.

Tonnage Tax Scheme Extension:

The Tonnage Tax Scheme is now extended to inland vessels. This will encourage more cargo movement as the vessels will avail tax benefits based on their capacity, instead of profit, making investment in inland waterways vessels more financially viable.

PM GATI SHAKTI Portal Extension:

The extension of the PM GATI SHAKTI Portal to private players will bring efficiency in cargo movement through multimodal infrastructure planning at a more economical rate.

These measures are expected to generate about 1.1 million direct and indirect employment opportunities. The initiative also aligns with Indian Prime Minister Narendra Modi’s vision of transforming India into a developed nation by 2047.

References: PIB, Reuters

Source: Maritime Shipping News