The Indian Union Cabinet chaired by the Prime Minister Narendra Modi has cleared a Rs.4,000-crore ($615 mln) package to spur India’s ship building industry, combined with a slew of incentives.
The sops include the right of first refusal on all government purchases for Indian shipyards, tax incentives and the ‘infrastructure’ status for shipbuilding and ship repair industry that would help them tap easier financing.
The measures are aimed at countering the cost disadvantage involved in ship building. The measures includes grant of financial assistance to shipyards.
This includes: After delivery of ship, financial assistance of 20% of the contract price or the fair price, whichever is lower.
The financial assistance will be reduced at the rate of 3% every three years and will be given for all types of ships.
This policy will be in force for next ten years, says a report by PTI.
While the sector is going through an extended global slump, the government said it is important to promote the shipbuilding industry as it has the same impact as infrastructure sector due to its higher multiplier effect on investment, turnover and employment.
“The shipbuilding industry is strategically important industry due to role in energy security and maritime defense and for developing heavy engineering industry,” the statement said.
The promotion of the shipbuilding and ship repair industry in India is important as the shipbuilding industry has the same impact as infrastructure sector due to higher multiplier effect on investment and turnover (11.6 and 4.2) and high employment potential due to multiplier effect of 6.4.
The policy will give a big boost to the shipbuilding and ship repair industry and will facilitate the ‘Make in India’ initiative of the Government of India,” it added.