Infrastructure Status to Shipyard Industry


The government in January 2016 granted infrastructure status to shipyard industry, a move aimed at promoting the 'Make in India' initiative.

With this inclusion, the financial stress which the stand alone shipyards are experiencing will be eased substantially.

With the infrastructure status, shipyard industry will be able to avail flexible structuring of long-term project loans, long-term funding from infra funds at lower interest rates and longer tenure equivalent to the economic life of their assets, relaxed ECB norms, issuance of infrastructure bonds for meeting working capital requirements as well as benefits under Income Tax Act, 1961.

Promotion of the shipbuilding and ship repair industry in India is important as it has the same impact as infrastructure sector due to higher multiplier effect on investment and turnover and high employment potential due to multiplier effect.

The shipbuilding industry is a strategically important industry due to its role in energy security, national defence and for developing heavy engineering industry.

Currently the Indian shipyards employ about 30,000 persons which will go up substantially once this sector is revitalised.

To promote the shipbuilding industry under the 'Make in India' initiative, the government in December 2015 approved a proposal for financial assistance of 20 per cent for ships built in the country.

The implementation of the policy, which would be in force for 10 years, requires a budgetary support of Rs 4,000 crore.

The proposal included a policy for grant of financial assistance to shipyards, after delivery of ship, to counter cost disadvantages at 20 per cent of the contract price with a provision to reduce such assistance at 3 per cent every three years and will be given for all types of ships.

Besides grant of a Right of First Refusal for Indian shipyards for government purchases, tax incentives were given.

From 2025 onwards, only Indian-built vessels are to be procured by CPSUs for governmental purpose or for own purpose.

To promote 'Make in India' government has exempted customs and central excise duties on inputs utilised for the purpose of manufacture of ships.

Friday, 22nd Jan 2016, 03:19:51 AM

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