The government plans to seek Cabinet approval to a policy aimed at increasing India’s share in the global shipbuilding market. The proposed policy includes a recycling credit note scheme, fixed subsidies for shipbuilders, and the creation of three maritime clusters in Andhra Pradesh, Gujarat, and Odisha, according to The Economic Times.

Under the new policy, fleet owners will receive a credit note equivalent to 40 percent of the scrap value for ships dismantled at Indian breaking yards. This credit can be used to offset the cost of constructing new vessels at Indian shipyards. The policy aims to encourage both domestic and international fleet owners to recycle ships in India and build new ones locally.

“This scheme will incentivise the recycling of ships in India,” an official told The Economic Times. “To benefit from the credit note, fleet owners must construct new ships in India. If they choose to order new ships from abroad, the credit will not apply. The goal is to enhance the competitiveness of Indian shipyards on the global stage and attract more orders.”

India holds less than 1 percent of the global shipbuilding market but aims to rank among the top 10 by 2030 and the top five by 2047. The new policy will provide graded subsidies to shipyards: 20 percent for standard vessels, 25 percent for special category ships like oil, gas, and chemical tankers, as well as container ships, and 30 percent for eco-friendly vessels and those with advanced technology.

These subsidies will be fixed for a period through March 2034, with a potential extension until 2047, to offer long-term stability for shipyards when securing orders.

This new scheme will replace the current financial assistance program launched in April 2016. The existing scheme, which offered decreasing subsidies over a 10-year period, has seen limited uptake, partly due to the pandemic and the focus on building naval and coast guard vessels rather than commercial ships.

The government had allocated Rs 4,000 crore for the existing scheme, but only 10% of this amount has been utilised with less than two years remaining. The new policy, dubbed 'Shipbuilding Policy 2.0,' seeks to address the shortcomings of the current scheme and boost local shipbuilding.