Ambitious plans to kick-start Indias shipbuilding

The Indian government is proposing a new maritime policy incorporating ambitious plans for the shipbuilding and ship repairing industry.

On the drawing board are plans for two international shipbuilding yards on the east and west coast on a public-private partnership basis. The Indian shipbuilding industry is in the doldrums with limited capacities, excessive manpower and lack of modern production facilities. At present, the Indian shipbuilding industry is only capable of building ships up to 110,000 DWT which is considered too small.

In comparison, China already has 58 shipyards and is building another large yard near Shanghai, and aims to be the world?s leading shipbuilding nation by 2015. With China in the forefront, the government has set 2025 as the deadline to overtake China.

The ministry of shipping has drafted a policy after reviewing governmental support and subsidies given by other countries. “In a developing country, the government?s role in infrastructure creation should be through policy, resource generation and regulation, rather than day-to-day administration,” says D T Joseph, secretary, shipping. The government wants to strengthen the sector as it promises employment and foreign exchange earnings. Taxation on shipbuilding and ship repair including customs and central excise would be brought on par with EOU units.

A total exemption from service tax, sales tax and VAT has also been suggested while R&D investments in shipbuilding may get 100% exemption from corporate tax subject to a limit of 10% of the profit for the year.

Capital goods imported for these activities would also be exempt from customs duty. To boost quality, exemption from import duty would be extended if equipment that satisfies International Maritime Organisation (IMO) norms is imported for installation. A 20-30 year subsidy support plan is likely to replace the existing scheme so that construction of all kinds of vessels can be undertaken.

Capping of prices of indigenous steel to facilitate consumption by shipbuilders to devise their own procurement procedures nd other measures. A new dry-docking policy to create ship-repair units adjacent to ports is also under active consideration.

The draft plan has mooted an imposition of a 10% surcharge on the cost of repairs of Indian flagged ships done abroad if the work could have been done locally in India.