Comments
The Economic Survey 2022-23 bets high on the strategically important shipbuilding industry for multiplier effects on employment opportunities and ancillary businesses to plough back the significant contribution to the Gross Domestic Product (GDP).
Assessing on the basis of international shipbuilding statistics, the Survey cited an example to state that an injection of approximately ₹1.5-lakh crore in naval shipbuilding projects would accrue a circulation of ₹2.73-lakh crore in the shipbuilding sector due to the multiplier effect.
The government has already infused capex of ₹70,000 crore in defence services over eight months since last April which was the third highest investment behind road transport and highways, and railways, said the Economic Survey 2022-23 presented to parliament on Tuesday.
‘Strategically important industry’
The shipbuilding, insists the government, is a strategically important industry due to its role in energy security for maritime national interest given that China is threatening to dominate the Indo-Pacific region, and to push the development of the heavy engineering industry.
The government is pitching multiple Indian Navy shipbuilding projects, which as of now are at various stages of development in Indian shipyards, for providing the requisite impetus to the industry.
“More than 130 IN warships have been constructed at Indian shipyards, and presently, 41 of 43 ships and submarines are being constructed at various public and private sector Indian shipyards. These initiatives, through various channels, are contributing to economic growth and employment in the country,” said the Survey.
The Navy’s indigenisation initiatives have resulted in a significant infusion of economic activity by creating employment opportunities for MSMEs and other industries, elaborated the Survey. A recently commissioned warship ‘INS Vikrant’ alone engaged approximately 500 MSMEs, 12,000 employees from ancillary industries, and 2,000 shipyard employees.
Investment to Indian economy
A study undertaken by the IN (Indian Navy) for the construction of seven P17A ships reveals that around three-fourths of the total project cost of warships is invested back into the Indian economy.
“This investment is ploughed back into the economy through indigenous sourcing of raw materials, development of equipment and systems installed onboard ships and other manpower services,” observed the Survey.
“Based on International shipbuilding statistics, if one takes a conservative Marginal Consumption to GDP Ratio (MCGR) of 0.45 for the shipbuilding sector, the investment multiplier would be approximately around 1.82,” it flagged.
The Survey also stated the sector generates opportunities for smaller businesses and strengthens supply chain networks. It is noteworthy that a significant proportion of value addition, approximately 65 per cent, in the construction of a ship is derived from manufacturers of shipboard materials, equipment, and systems.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.