Shipbuilders press for subsidy revival

Despite the boom in the global shipbuilding market, Indian shipyards face the threat of becoming less competitive following the expiry of the five-year government subsidy scheme about two months ago. The shipyards have asked the Government to resume the subsidy scheme as shipbuilding, unlike conventional manufacturing, is not protected by tariff barriers and they have to compete with global players for both domestic and export orders. “Initially, the Government was not willing to even talk about it, but our subsequent meetings with senior officials in the Finance and Shipping Ministries have drawn a positive response. They have understood the importance of the subsidy scheme,” said V. Kumar, managing director of Bharati Shipyard and secretary of the Shipbuilders Association of India. The Government had introduced the 30% subsidy scheme for private sector shipyards in 2002, as the industry had no protection in the form of tariff barriers. Aided by the Government support and the subsequent boom in the market, the turnover of the shipyards increased from Rs 1,017 crore to Rs 3,657 crore in the last five years. With trends indicating that the boom may continue for another five to seven years, shipbuilders have lined up investments of Rs 18,500 crore. L&T and Pipavav shipyards head the list with planned investments of Rs 3,000 crore each, followed by Good Earth Marine with Rs 2,000 crore and ABG, Bharati and Adani Group with Rs 1,500 crore each. The industry has listed out the support being given to the Korean, Chinese and European yards by their respective governments. For example, the Chinese yards get export buyers? credit at 2.7%, subsidy on inland sailing ships, customs duty rebate on imported inputs and exemption from enterprise income tax equivalent to corporate tax.