India’s Ministry of Ports, Shipping and Waterways (MoPSW) is in discussions to bring in investors – that will include pension funds, financial institutions, shipping lines and operators and also major ports (state-owned ports) – to set up the proposed ₹25,000 crore Maritime Development Fund in its bid to push shipbuilding activities.
A comprehensive shipbuilding policy, complete with financial assistance schemes – also aimed at pushing ship repair and investment in greenfield ship-yards – will be formalised in the next few weeks, Minister Sarbananda Sonowal said.
Shipbuilding and ship repair clusters are being planned across five States, namely, Gujarat, Maharashtra, Kerala, Andhra Pradesh and Odisha.
The policy will also look to double the incentives in case of use of green-fuel options, or if there are hybrid fuel options, he mentioned.
“There are inter-ministerial discussions that are on-going. We are finalising the contours of the shipbuilding policy and maritime development fund details. Our aim is to push India among the top 10 by 2030 and in the top 5 by 2047 in terms of shipbuilding,” he told businessline.
Funding options
Senior ministry officials said interventions are being explored on the demand and supply side both. There is a Shipbuilding Finance Assistance programme - in the supply side - that will allow shipyards to deliver ship “on a competitive rate”. Subsidies will be provided.
On the demand generation side, the ministry will look to push the Maritime Development Fund, which “will provide equity”. “We are looking at a model where we will have SPVs- between producers, consumers, operators and builders – to own and operate the ship. This will also lead to savings of around $75 –80 billion of leasing costs annually,” the official said.
In terms of funding, different options continue “to be explored”, the official said, adding instead of debt, the participants of the fund will have “equity control” in what is “a very profitable venture in the coming days”.
The fund will look at long term financing options, covering 25 – 30 years, generally considered to be the lifespan of vessel.
India’s fleet currently stands at 1,526 vessels with a gross tonnage (GT) of 14 million as of December 2023. However, about 44 per cent of these vessels are over 20 years old.
Doubling container capacity
According to Sonowal, the container handling capacity across India’s major ports will double to 40 million TEUs, over the next five years.
Increase would be through the upcoming Vadhvan port , off Mumbai, with a capacity of 11 million TEUs, the upcoming Tuticoring International Container Terminal on the east coast will add another 2 million TEUs, around 4 million TEUs at Deen Dayal Port and an additional 2.5 million TEUs at JNPA.
“By the end of this fiscal, JNPA will have handled 10 million TEUs of container cargo traffic. And with Galathea Bay port – off Andaman coming up, our container handling capacities, will increase further,” he said.