Centre Notifies Rs. 44,700-Crore Shipbuilding Guidelines

The Ministry of Ports, Shipping and Waterways (MoPSW) has issued operational guidelines for two flagship schemes approved by the Union Cabinet on 24 September, 2025, namely:

• the Shipbuilding Financial Assistance Scheme (SBFAS); and
• the Shipbuilding Development Scheme (SbDS).

Together, these programmes involve a combined outlay of approximately Rs. 44,700 crore and are intended to reposition India as a competitive global shipbuilding centre. Both schemes will remain in force until 31 March, 2036, with an in-principle policy horizon extending to 2047, aligning their design and intent with the Government’s long-term Maritime Amrit Kaal Vision (MAKV) 2047.

The SBFAS serves as the principal demand-side intervention. With a budget of about Rs. 24,736 crore, it offers financial support ranging from 15% to 25% of the lower of the vessel’s contract price or its fair price, depending on the category and complexity of the vessel. The scheme applies to contracts signed on or after 24 September 2025, subject to conditions such as prescribed domestic content levels, construction of the major hull in India, and classification by a recognized maritime organisation. Assistance is released in milestone-linked tranches—covering events such as keel-laying, launch and delivery and is secured through financial instruments. The subsidy may be reduced where actual payments fall below assessed price levels, and clawback provisions with interest apply in cases of ineligibility or delayed completion. Eligibility also extends to government contracts, defence export vessels, series orders and multi-vessel production programmes, reflecting the capital-intensive and long-gestation nature of shipbuilding projects.

A distinctive feature of SBFAS is the Shipbreaking Credit Note (SCN) mechanism. Where a vessel is recycled at an Indian ship-recycling facility compliant with the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, the owner receives a credit equal to 40% of the fair scrap value. This credit may be redeemed against the cost of constructing a new vessel at an Indian yard, subject to an upper cap of 5% of the new build’s fair price. The SCN framework simultaneously promotes environmentally sound domestic recycling and incentivises fleet renewal through Indian construction.

Implementation oversight for the schemes rests with the National Shipbuilding Mission (NSbM), supported by the Directorate General of Shipping and sectoral public institutions. This governance structure formalises policy supervision over financing support, risk management and cluster-based industrial development and establishes a centralised accountability framework for execution.

Running alongside the financial assistance framework is the SbDS, which has an estimated allocation of Rs. 19,989 crore and is directed at expanding supply-side capacity. The SbDS provides for the development of greenfield shipbuilding clusters through 50:50 Centre-State special purpose vehicles, under which 100% capital support is available for common-use infrastructure. It also supports brownfield capacity expansion, offering 25% capital assistance for eligible yard-modernisation projects. A dedicated Credit Risk Coverage Framework provides government-backed insurance for pre-shipment, post-shipment and vendor-default risks, thereby enhancing the bankability of shipbuilding contracts, an area traditionally challenged by long project cycles and concentrated credit exposure. The scheme further contemplates the establishment of an India Ship Technology Centre under the Indian Maritime University to strengthen research, design innovation, testing capability and skill development, particularly in specialised and high-technology vessel categories.

Taken together, the SBFAS and SbDS reflect a deliberate twin-track policy strategy that combines demand-side support, capacity building, risk-sharing mechanisms and institutional oversight. If implemented effectively with predictable budgetary backing and disciplined disbursement, the schemes have the potential to reposition India as a globally competitive shipbuilding destination while generating wider benefits across associated sectors such as recycling, component manufacturing, marine engineering, research and development, and maritime skill development.