Shares of Essar Shipping and GE Shipping are sharply higher by 2.5-4.5 percent in trade on September 16, along with shipbuilders such as Cochin Shipyard and Mazagon Dock which are gaining by close to a percent each, a day after MoS for Ports and Shipping, Shantanu Thakur said the Centre plans to develop more shipyards and target 5 percent share of global shipbuilding market by 2030.
The sentiment in select stocks was positive after Bloomberg News reported citing people familiar with the development that the Centre also has plans to rollout incentives worth Rs 4,000 crore to support the shipbreaking industry, likely by end of September. The incentives would be for the longer term and may also involve credit notes to ship owners bringing old vessels to Indian shores, the report said.
Incentive for Shipbreaking
This scheme for a shipbreaking credit note was announced in the Union budget and incentivises ship scrapping by issuing credit note for 40 percent of the scrap value, which can be reimbursed to buy new Made in India ships.
Moneycontrol is yet to independently confirm the quantum of the incentive, though in the past, it has been reported that the Centre has ambitious plans to incentivize India's domestic shipping industry through various incentive schemes and sops. In this union budget, Finance Minister Nirmala Sitharaman had proposed to set up a Maritime Development Fund (MDF) for financial assistance, via equity or debt securities. With an initial corpus of Rs 25,000 crore, MDF will have government's contribution at 49 percent while the rest will be from port authorities, PSUs, financial institutions as well as the private sector.
"While the Shipbuilding Financial Assistance Policy (SBFAP) is designed to provide financial incentives to Indian shipyards, the Ship-breaking Credit Note further strengthens the domestic industry by encouraging investment and expansion. These measures are expected to drive capital inflows, create employment opportunities, and enhance sectoral competitiveness," Shipping Minister Sarbananda Sonowal had said after the budget announcement.
Eye on Global Shipbuilding Market
The Shipping Ministry has plans to develop new shipbuilding clusters of 1-1.2 million Gross Tonnage (GT) each. Sarbananda Sonowal had said earlier this year that public-private partnerships and international collaborations will be crucial to this ambition. "This strategic push is crucial in realising India’s vision of becoming a $30 trillion economy by 2047. By leveraging the Public-Private Partnership (PPP) model, the scheme is designed to attract private investment, promote modernisation, and advance green technologies," Sonowal had said.
On September 15, MoS for Ports and Shipping, Shantanu Thakur had told a CII conference that India plans to add 10 world-class shipyards in the next five years. The government plans to develop "10 world-class shipyards by 2030, supported by public-private partnerships and international collaborations that will bring global best practices to Indian shores," Shantanu Thakur had said.
"We are targeting a 5 percent share in the global shipbuilding market by 2030, a significant leap from our current position. This will be achieved through strategic investments in automation, digital twin technology and green shipbuilding innovations," MoS for Ports and Shipping added.
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