Shipping Corporation, Great Eastern Shipping, Mazagon Dock Shipbuilders stocks gain up to 5% as FM announces thrust on shipbuilding in Budget 2025

Experts had said that any policy measure promoting indigenous shipbuilding will positively impact the sector.

Shipping and maritime stocks rallied sharply on February 1, as the Finance Minister Nirmala Sitharaman announced that the Shipbuilding Financial Assistance Policy will be restarted in the Union Budget 2025.

Further, the FM proposed the exemption of basic customs duty on the shipbuilding and shipbreaking companies, for the period of ten years.

The FM also announced that a maritime development fund with corpus of Rs 25,000 crore would be set up. The Central government will give the shipbuilding industry a thrust, as shipbuilding clusters will be facilitated.

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Shares of Mazagon Dock was higher by 1.3 percent at Rs 2,531.70 per share, Garden Reach Shipbuilders jumped 2.4 percent to Rs 1,663.1 per share. Shipping Corporation, Great Eastern Shipping, Adani Ports were all higher by 1-5 percent each.

Currently, India has a mere 0.05 percent of the global market-share in shipbuilding. This is significantly lower than China (~47 percent), South Korea (~30 percent), and Japan (~17 percent), which currently dominate the industry.

According to Vivek Merchant, Director, Swan Defence and Heavy Industries, any emphasis on improving shipping infrastructure and promoting indigenous shipbuilding will positively impact the sector.

Ahead of the interim budget in 2024, the Prime Minister had launched the 'Maritime Amrit Kaal Vision 2047’, in order to support the country’s shipping, logistics, and infrastructure sector.

The Amrit Kaal Vision 2047, formulated by the Ministry of Ports, Shipping & Waterways, builds on the Maritime India Vision 2030 and aims to develop world-class ports and promote inland water transport, coastal shipping, and a sustainable maritime sector.

Industry players hope that the government will build on this momentum and allocate further resources towards the growing sector.

Shipbuilding Financial Assistance Policy (SBFAP) provides Indian Shipyards a level playing field vis-à-vis Foreign Shipyards for domestic and international shipbuilding orders. This scheme is aimed for revival and promotion of Shipbuilding industry in India for shipbuilding contracts signed from 2016 to 2026.

It is noted that, public and private shipyards like Cochin Shipyard Ltd, Chowgule Shipyard, Mazgaon Shipyard, Garden Reach Shipbuilders and Engineers have secured several domestic and foreign shipbuilding orders, thereby leveraging the availability of financial assistance through SBFAP.

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