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Boosting shipbuilding: The Minister of Shipping, Road Transport and Highways, Mr T.R. Baalu, the Deputy Minister (Industry), Ministry of International Trade and Industry, Malaysia, Dato' Jacob Dungau Sagan (left), and the Vice- President of FICCI, Mr Rajan Bharti Mittal, during the inauguration of Global Conference on Shipbuilding Industry in the Capital on Tuesday. - Kamal Narang

Our Bureau

New Delhi, Oct. 7 The Shipping Ministry will circulate the Cabinet note for reviving the shipbuilding subsidy this week.

A subsidy of 30 per cent for shipbuilding industry was discontinued from August 14, 2007.

The subsidy was extended to ocean-going merchant vessels of over 80 metres in length if they were manufactured for the domestic market, where all ships that were exported were eligible for the subsidy.

Supported by the subsidy scheme, the turnover of Indian shipyards increased from Rs 1,017 crore to Rs 3,657 crore in the 2002-07 period.

Since last year, the shipbuilding industry has been lobbying hard to get an extension of the subsidy scheme.

“Cabinet note on the extension of subsidy for shipbuilding industry will be circulated this week. We will get comments on that, which would be sent to the highest authority for taking a decision,” the Minister for Road Transport, Highways and Shipping, Mr T.R. Baalu, said while addressing a conference organised by FICCI, Shipyards Association of India and All India Shippers Council.

However, Mr A.P.V.N. Sarma, Secretary-Shipping, declined to divulge details of the proposal.

The Shipping Ministry had tried extending the subsidy scheme last year but the Finance Ministry had struck down the proposal.

“Since we first sell a ship and then manufacture it, we would like to have clarity on the exact cost structure,” said Mr V. Kumar, Secretary General, Shipyards Association of India (SAI) and Managing Director, Bharati Shipyard.

On how the order-book of Indian shipbuilders has been affected, following discontinuation of the subsidy scheme, Mr Kumar said, “In the 2002-07 period, the Indian shipbuilders had received 220 orders.

“In the last one year, 22 orders were received, which include eight optional orders.”

Optional orders are basically confirmation orders from those customers who have been serviced earlier and had an option to order for more ships in their initial contracts.

The growth of shipbuilding industry, in almost all the shipbuilding countries, has demonstrated a strong correlation with Government support to the sector — comprising direct subsidy alongside a number of indirect incentives, Mr Kumar said.

These measures have enabled new entrants such as Japan in 1960s, Korea in 1970 and now China, to establish their presence and slowly dominate the global shipbuilding activity.

These measures have also enabled players such as Germany to maintain their share in the global market.

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