India is moving to ease regulations under its revamped Shipbuilding Financial Assistance Scheme (SBFAS), aiming to convert a recently approved multi-billion-rupee maritime package into concrete orders for domestic shipyards, reports Port News.
The scheme is part of a broader four-pillar ₹69,725-crore package approved by the Union Cabinet on 24 September and extended to 31 March 2036, with a ₹24,736-crore corpus that includes provisions for ship-recycling credit notes and the new National Shipbuilding Mission. Draft guidelines released by the Ministry of Ports, Shipping and Waterways in early November indicate a more permissive regime compared to the outgoing Shipbuilding Financial Assistance Policy, which remains in effect until March 2026.
Eligibility and Transitional Rules
The proposed framework clarifies eligibility for government-linked and strategic contracts awarded through competitive bidding, negotiated tenders, or nomination, provided localization and technical criteria are met. Export orders, including defense vessels, may also qualify under the same conditions. Transitional rules will allow shipyards to choose between the existing SBFAP and the new SBFAS for contracts signed between the Cabinet approval date and 31 March 2026. Favorable amendments to the SBFAS are expected to apply retrospectively to projects with in-principle approval.
A key feature of the revamped program is the Ship Recycling Credit Note, which grants ship owners 40% of a vessel’s fair scrap value if scrapped at a Hong Kong Convention-compliant yard. This credit can be applied toward the purchase of a new vessel at an Indian yard—up to 5% of the contract value—remains valid for three years, is indivisible, and can be transferred to another owner or yard.
Maritime Development Fund and Expansion Schemes
The overall maritime package also includes a ₹25,000-crore Maritime Development Fund and a ₹19,989-crore Shipbuilding Development Scheme, targeting new clusters and brownfield expansion. Officials have stated that the overhaul is intended to position India among the top 10 shipbuilding nations by 2030 and the top five by 2047.
The ministry cited limited uptake of the original SBFAP, with only 18 of 39 registered yards using it by 2024, partly due to a previously imposed ₹40-crore cap per standard ship that constrained competitiveness. The cap has now been removed, while the 14% assistance rate for the final year of the old policy has been retained. Government documents describe shipbuilding as the “mother of heavy engineering,” estimating that every rupee invested could generate roughly 1.8 times the economic output and increase employment by a factor of 6.4. Industry feedback on the proposed reforms has been largely positive, signaling strong support for India’s ambitions to strengthen its domestic shipbuilding sector.
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Source: Port News
