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Private shipbuilders have appealed to the government to clear their pending subsidy dues. Pointing out that they are not protected by any tariff barriers when they have to compete with players from Japan, Korea and China, they are also seeking a level playing field with their public sector counterparts.
The Shipbuilders Association of India (SAI), a body of 22 private sector shipbuilders, claims they are yet to get ₹900 crore as subsidy under a 2002-2007 scheme, which entitled them to 30 per cent subsidy.
2014 scheme
According to SAI, even under the 2014 financial assistance scheme, for which ships have been delivered, ₹150-crore worth of subsidy has not been passed on to the shipyard owners.
More than half of the ₹900-crore subsidy could not be claimed as their orders dried up owing to global downturn in shipping sector. Now these orders are closer to completion, and they have requested the Ministry to disburse the subsidy. This would require a fresh Cabinet approval.
The pending subsidy is due to ABG Shipyard, Bharati Defence and Infrastructure, Reliance Naval and Engineering (Reliance Pipavav), Shoft Shipyard, Tebma, L&T Shipbuilding and Modest Infrastructure.
SAI said that from 2007 onwards, they were hit by recession with shipowners cancelling or delaying orders. The situation became tougher with the government taking years to disburse subsidy.
Govt shipyards
“Finally, banks pulled the rug from under our feet, making it difficult for us to operate,” said V Kumar, President, Shipyards Association of India, stressing that shipyards are strategic assets and need government support as extended by all other countries. Kumar said public sector shipyards have huge orders that will take 20-25 years to deliver, given the present capacity levels. The public sector shipyards appear to be bidding below costs, in the opinion of SAI. “In such a situation, we would rather be nationalised,” it said, adding that they have a working capital requirement of ₹5,000 crore to stay afloat.
The private shipyards are eyeing those orders that the public yards would take long to build, noting that most of the private shipyards are operating below capacity, ranging from 5 to 20 per cent. The medium-sized shipyards have been able to stay afloat, with 50-60 per cent capacity utilisation.
The Shipyard Association, which raised these concerns at a meeting with the Shipping Minister Nitin Gadkari, added that the Minister has said he would extend whatever assistance is possible from his Ministry; and would refer the remaining points to the inter-ministerial group, and would refer the matter further up, if need be.
These 22 shipyards have put in an investment of ₹20,000 crore in the assets which are not getting utilised. This excludes the ₹28,000 crore that were planned, but did not fructify by other biggies.
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