Concerned over India's declining market share in global shipbuilding that currently stands at a meagre 0.01 per cent, the Shipping Ministry has sought immediate policy measures including revival of subsidy scheme for shipbuilders.
“China, Korea and Japan have emerged as leaders and Taiwan, Vietnam and Brazil are entering the market...The (Indian) industry is at such a stage today that it needs support in the form of shipbuilding subsidy as well as other measures,” the Shipping Ministry has said, according to an official document.
The Ministry has argued that ever since the subsidy scheme has expired, India's share is declining and has come down to 0.01 per cent from 1.24 per cent.
“The Shipbuilding subsidy scheme 2002-07 increased India's share of world order from 0.02 per cent in 2002 to 1.24 per cent in 2007 but after the expiry of subsidy scheme it came down to 0.01 per cent...The is the right time to invest since market is at a low level presently and a boom is expected in the next 2-3 years,” it argued.
Target
According to the new Maritime Agenda 2020 of Ministry of Shipping, the government has set a target to increase India's share in global ship building to 5 per cent, to grab 10 per cent share in world ship repair and generate 2.5 million additional jobs.
Indirect support
Apart from asking for direct fiscal support through provision of subsidy initially for five years, the ministry has also sought indirect support through exemption of import duty for capital equipment, withdrawal of excise duty on vessels sold in domestic tariff are and service tax exemption for the industry.
Besides, it also seeks “treating steel supply from domestic companies to Indian shipyards as deemed exports and other policy measures such as granting infrastructure status for shipbuilding and preference for Indian built flag vessels.”
Extension
The subsidy scheme was introduced to help the shipbuilding industry, and was given five-year extensions until it lapsed on August 14, 2007.
The scheme offered shipbuilders a 30 per cent subsidy on the cost of building ocean-going merchant vessels that were more than 80-metres long, if they were built for the domestic market.
For export orders, ships of all types and capacities were eligible for the subsidy scheme.
According to the scheme, while public sector yards were given the subsidy in instalments, private shipyards could receive it after the vessel was delivered to the buyer.