Financial Assistance Policy for Indian Shipyards


Minister of State for Shipping, Shri Pon. Radhakrishnan has informed that the Government of India has approved a new Shipbuilding Financial Assistance Policy for Indian shipyards to provide them a level playing field vis-à-vis foreign shipyards. Financial assistance @20% of the “Contract Price” or the “Fair Price” as determined by international valuers, whichever is lower, is to be granted to shipyards for shipbuilding contracts signed during April 1, 2016 to March 31, 2026 including the said dates. The 20% financial assistance would be provided for ten years reducing @3% every 3 years.

Further, the Government of India has taken following major steps to encourage Indian shipbuilding industry:

• Institutional Mechanism on Infrastructure in its 10thmeeting held on December 21, 2015 has recommended grant of ‘infrastructure status’ to stand alone shipyards. Infrastructure status would enable Indian shipyards to avail cheaper long-term source of capital to Indian shipyards. The attendant tax benefits would enable the shipyards to reduce their cost disadvantage and invest in capacity expansion, thereby giving a boost to the Indian shipbuilding industry.

• Exemption on Customs and Central Excise duty on inputs used in shipbuilding vide Notification Nos. 54/2015-Customs, 55/2015-Customs, 44/2015-Central Excise and 45/2015-Central Excise all dated November 24, 2015. Central Excise duty exemption on inputs used in ship repair of ocean going vessels has been granted in the Union Budget 2016-2017.

• Procedure for procuring goods at concessional/NIL rate of Central Excise and Customs duty for the Ship Building and Ship repair has been considerably streamlined.

All government departments or agencies including CPSUs have to provide Right of First Refusal to Indian shipyards while procuring or repairing vessels which are utilized for governmental or own purpose.

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