₹44,700 Crs Outlay to Boost India’s Shipbuilding Capacity: Shipbuilding Financial Assistance Scheme and Shipbuilding Development Scheme
Shipbuilding is a strategic sector with strong forward and backward linkages to steel, heavy engineering, ports, logistics and national security. Recognising its importance, the Ministry of Ports, Shipping and Waterways has notified detailed operational guidelines for two flagship initiatives—the Shipbuilding Financial Assistance Scheme (SBFAS) and the Shipbuilding Development Scheme (SbDS). With a combined outlay of ₹44,700 crore, these schemes aim to revive domestic shipbuilding, enhance global competitiveness and anchor India’s growth in the vision of Atmanirbhar Bharat.
Rationale Behind the Schemes
India’s shipbuilding sector has historically faced disadvantages such as:
- High capital costs
- Limited access to long-term finance
- Inadequate infrastructure and technology
- Competition from heavily subsidised global shipbuilding hubs
Despite a long coastline and strong maritime potential, India’s share in global shipbuilding has remained marginal. The newly notified schemes seek to correct these structural weaknesses through financial support, infrastructure creation and institutional strengthening.
Shipbuilding Financial Assistance Scheme (SBFAS)
- The SBFAS is designed to address cost disadvantages and improve the commercial viability of shipbuilding in India.
- Key features include:
- Financial assistance of 15%–25% per vessel, depending on vessel category.
- Graded support for small normal, large normal and specialised vessels.
- Stage-wise disbursement linked to defined milestones and backed by security instruments.
- Independent valuation and milestone-based assessments have been made mandatory to strengthen governance and ensure efficient use of public funds.
- A notable innovation under the scheme is the Shipbreaking Credit Note, under which ship owners scrapping vessels at Indian yards receive a credit equivalent to 40% of the scrap value. This creates a linkage between ship recycling and new ship construction, promoting a circular economy in the maritime sector.
- Institutionally, the scheme provides for the creation of a National Shipbuilding Mission, enabling coordinated planning, monitoring and execution of shipbuilding initiatives across ministries and agencies.
- Over the next decade, SBFAS is expected to catalyse shipbuilding projects worth nearly ₹96,000 crore, generate employment and stimulate domestic manufacturing.
Shipbuilding Development Scheme (SbDS)
- While SBFAS focuses on financial viability, the SbDS addresses long-term capacity and capability constraints.
- Its major components include:
- Development of greenfield shipbuilding clusters
- Expansion and modernisation of existing brownfield shipyards
- Establishment of an India Ship Technology Centre under the Indian Maritime University to support research, innovation, design and skill development
- Under the funding framework:
- Greenfield clusters receive 100% capital support for common maritime and internal infrastructure through a 50:50 Centre–State Special Purpose Vehicle
- Brownfield expansion is eligible for 25% capital assistance for critical infrastructure such as dry docks, shiplifts, fabrication facilities and automation systems
- Disbursements are milestone-based and monitored by independent evaluation agencies
- The scheme also includes a Credit Risk Coverage Framework, offering government-backed insurance for pre-shipment, post-shipment and vendor-default risks to improve project bankability and financial resilience.
Expected Outcomes and Strategic Significance
- Both SBFAS and SbDS will remain valid until March 31, 2036, with an in-principle extension envisaged up to 2047.
- Together, SBFAS and SbDS aim to:
- Raise India’s commercial shipbuilding capacity to about 4.5 million gross tonnage per annum by 2047
- Promote indigenous technology development and generate employment
- Strengthen India’s maritime security and economic resilience
- Deepen integration of shipbuilding with the Make in India initiative
Conclusion
The notification of detailed guidelines for SBFAS and SbDS represents a systemic policy intervention rather than a piecemeal subsidy approach. By combining financial assistance, infrastructure creation, risk mitigation and institutional coordination, the schemes address long-standing structural barriers in India’s shipbuilding sector.
If implemented effectively, these initiatives can transform shipbuilding into a pillar of India’s maritime economy, reinforcing self-reliance, employment generation and strategic autonomy in line with the broader goals of Viksit Bharat.