A view of the Hindustan Shipyard Ltd in Visakhapatnam. Image for representation
| Photo Credit: C.V. Subrahmanyam
Budget 2025 has several announcements aimed at kickstarting the building of merchant ships that had ground to a halt in recent decades. Finance Minister Nirmala Sitharaman has promised that the Shipbuilding Financial Assistance Policy will be revamped to address cost disadvantages.
While shipyards and ports have been included in the Infrastructure Harmonized Master List, the Budget has said large ships will also be included on the list. Providing infrastructure status to large ships will reduce financial costs, sometimes by as much as 10 percentage points, and can provide a significant fillip to their construction. The announcement means smaller ships, tugboats and barges will not get infrastructure status.
Shipbreaking avenues
A move to gird up shipbreaking is the proposal to include credit notes for shipbreaking in Indian yards to promote circular economy. Shipbreaking is a source of steel and equipment as well, and facilitates recycling. Inputs to shipbreaking will also be exempted from basic customs duty. “The current turmoil in Bangladesh, which has led to disruptions in shipbreaking there, has created business opportunities for Indian shipbreaking yards that are among the world’s leading ones. The new measures will help Indian shipbreaking benefit from the opportunities,” said Sanjay Prashar, a shipping industry professional and former member of the National Shipping Board.
The Budget talks about expanding the range, categories and capacities of ships of shipbuilding clusters. A new policy will facilitate the provision of additional infrastructure facilities, skilling and technology.
For long-term financing of the maritime industry, a Maritime Development Fund with a corpus of ₹25,000 crore will be set up. This will be for distributed support and promoting competition. Further, basic customs duty will continue to be exempted for raw materials, components, consumables for shipbuilding for another 10 years.
The Budget talks about extending the tonnage tax scheme, presently available to only seagoing ships, to inland vessels. The tonnage tax scheme provides tax benefits based on trainees taken by shipping companies. This scheme will provide additional jobs and benefit inland shipping.
The Budget has also talked about more benefits for ship leasing units, insurance offices and treasury centres of global shipping companies set up in international financial services centres, primarily GIFT City in Gujarat.
Published – February 02, 2025 12:32 am IST
