Shipbuilding industry gets infrastructure status
The government has granted infrastructure status to the shipyard industry, enabling operators to avail flexible long-term funding at lower costs. The move came after the Institutional Mechanism on Infrastructure had recommended inclusion of shipyards engaged in shipbuilding and ship repair work under the harmonised list of infrastructure sectors. “With this inclusion, the financial stress which the standalone shipyards are experiencing will be eased substantially,” Ministry of Shipping said in a statement on Wednesday. Now, shipbuilding firms will be able to avail flexible structuring of long-term project loans at lower rates of interest for longer tenure equivalent to the economic life of their assets. They will also be able to issue infrastructure bonds for meeting working capital requirements and get tax benefits. To boost the country’s shipping infrastructure, the government has recently taken several steps to promote the industry. With a financial assistance policy approved on December 9, 2015, the government ensures financial assistance to shipyards up to 20% of the lower of the ‘fair price’ of each vessel built by them for at least ten years starting from 2015-16. This 20% assistance will be reduced by 3% every three years. With the revision of domestic eligibility criteria, the government enabled all the governmental agencies procuring vessels to undertake bulk tendering for their vessel related requirements with deliveries starting from 2017-2018, alongside granting Right of First Refusal (RoFR) for Indian shipyards for such orders till 2025. However, buyers are supposed to procure only Indian-built vessels for public or private uses from 2025 onwards. Similar relaxation also applies for repair works of vessels. With a view to counter the cost disadvantage to shipyards and promote indigenous shipbuilding industry as part of the ‘Make in India’ initiative, the Ministry of Shipping exempted customs and central excise duties on certain inputs required for the manufacturing of ships. At present, Indian shipyards employ about 30,000 persons.
January 21, 2015 | 4:27pm IST.
to success.