Shipbuilding, inland waterways get fillip in Budget
The Union Budget has placed strong impetus to realise the huge potential of India’s shipping sector. The forward-looking document aims at further enabling India’s shipbuilding industry with spurring and innovative initiatives to drive investment, generate income for the economy, train and employ human capital and create value for the future of the country. The Union Minister of Ports, Shipping & Waterways, Mr Sarbananda Sonowal, welcomed the Budget and termed it a progressive policy statement towards realising the vision of Prime Minister Mr Narendra Modi of a Viksit Bharat by 2047.
The Union Budget proposes to set up Maritime Development Fund (MDF) to support India’s Maritime sector by providing financial assistance, via equity or debt securities. The initial corpus of the fund is pegged at Rs 25,000 crores - where the government contribution will be 49%. The remaining balance will be contributed by Major port authorities, other government entities, Central PSEs, financial institutions as well as the private sector. This fund will directly benefit the financing for ship acquisition. It aims at boosting Indian flagged ships’ share in global cargo volume up to 20% by 2047. Further, an indigenous fleet will reduce dependability of foreign ships, improve balance of payments and secure the strategic interests of the country. By 2030, MDF aims at generating up to Rs 1.5 lakh crore investment in the shipping sector.
The Union Budget provided a shot-in-the-arm to India’s domestic shipbuilding industry after it announced new mega shipbuilding clusters in the country. This scheme will provide direct capital support in the form of creating the breakwater along with capital dredging. It also proposes a 10-year rent holiday for the land, if not provided at a nominal rate. Investment is also designed to support creation of trunk infra like roads, utilities, sewage treatment, among others. The proposed allocation of Rs 6,100 crore aims to support India’s existing shipyards in upgrading, modernising and automating their operations, enhancing efficiency, utilisation and overall output.
The Budget has also extended the Shipbuilding Financial Assistance Policy (SBFAP) 2.0, aimed at providing direct financial subsidies to Indian shipyards. This initiative seeks to help in securing orders by offsetting operational cost disadvantages, thereby strengthening the domestic shipbuilding industry. To be financed via Budgetary support, the total outlay of the scheme is Rs 18,090 crores.
Another innovative scheme announced is the Shipbreaking Credit Note. This scheme incentivises ship scrapping by issuing a Credit Note of 40% of the scrap value which can be reimbursed to buy new Made in India ships.
Besides, the Budget provided for Shipbuilding Capability Development Centres (SCDC), a platform for the development of innovative ship design and engineering solutions as well as testing & evaluation of shipping projects. An outlay of Rs 1,200 crore has been earmarked for this. Additional provision of Rs 1,040 crore has been announced for providing capital and operational assistance to the existing and upcoming shipbuilding design and training centres from the private sector. A budgetary allocation of Rs 610 crore is proposed for a support scheme for Research & Development (R&D) and innovation in ship technology. This initiative will foster development of new and improved shipbuilding technologies.
In a welcome move for the shipping industry, the Budget also proposes to include large ships of certain size into the Infrastructure Harmonised Master List (HML). This will make them eligible for benefits such as easier access to long-term financing and tax incentives. This will also attract private investment and enhance fleet modernisation.
Boost to inland waterways
To enhance inland waterways in the country, a budget of Rs 1,944 crore has been provided for the Inland Waterways Authority of India (IWAI) in FY2025-26, 31% higher than the Rs 1,644 crore in the revised Budget of FY 2024-25.
In a boost to inland waterways in the country, the Tonnage Tax Scheme is now extended to inland vessels. This will encourage more cargo movement as the vessels will avail tax benefit from its capacity, instead of profit. This will further incentivise shipping companies to invest in inland waterways vessels as they become more financially viable. Extension of the PM Gati Shakti portal to private players will further bring efficiency in cargo movement via multimodal infra planning at a more economical rate, highlighted an official release.
Source: Exim News Service: New Delhi, Feb. 3