1.5 lakh crore investment will come from sea fund by 2030

Finance Minister Nirmala Sitharaman has made several announcements in the budget to promote shipping and shipbuilding economy. This includes sea development fund (MDF), cheap loans for large ships, recycling schemes and industrial clusters. Ship’s builders and owners have been seeking support from the government for years, now expecting steps from the Ministry of Port, Shipping and Waterways towards implementing these reforms. Union Minister Sarbananda Sonowal said in a conversation with Dhruvaksha Saha that a MDF journey of Rs 25,000 crore is a strong start and this will bring investment up to Rs 1.5 lakh crore by 2030. Major parts of the conversation…

When will MDF start and how will it operate?

With the target of Rs 25,000 crore, we are envisaging to install it by 2023. It will have 49 percent equity investment of the central government and 51 percent will be invested from major ports, financial institutions, private investors, sovereign funds and other sources. Apart from this, multilateral agencies and International Development Bank are also potential partners to provide funds. The government is actively working towards starting it. This will be applicable in a structural and phased manner. Its fund structures, type of legal unit, investment strategy, fund management structure, administration, compliance system etc. have been finalized. At this time, it is waiting for approval from the cabinet.

What will the government offer in Shipbuilding Financial Assistance Plan (SBFAP)?

We have envisaged around Rs 18,000 crore for SBFAP 2.0. This capital will be used primarily to provide financial assistance to shipbuilders and this will enhance the production capacity and will be able to modernize the infrastructure and increase technical capacity. It proposes to subsidize contracted price or reasonable price for ships in India from 2024 to 2034. Apart from this, it will also include the current committed liability of SBFAP. The main aspect of the revised policy is to introduce credit note mcnism. This policy is yet to be approved by the cabinet.

Read Also:  RBI's big action to stop banking fraud, banks will get special 'domain name'; Registration will start from April

The government did not get the desired results of the first shipbuilding financial assistance policy. What have you learned from him and how have you been corrected in the revised policy?

Ship construction is a long -term industry and shipyard usually puts a hand in such projects that are multi -year -old. So the industry wants to take advantage of the plan, but their response and preparations were limited.

In the last 2-3 years, the lifting of funds including the distributed amount has increased. The first SBFAP is being paid under the scheme and a large amount of money has also been allocated as committed liabilities, which will be paid to the shipyards after completion of the contract with their customers.

Another major learning from the first plan is that the financial assistance was limited to Rs 40 crore, which did not encourage large and more expensive ships, which was demanded globally. This limit is removed in SBFAP 2.0.

Has a large domestic or foreign shipmaker shown interest in attending the shipbuilding cluster program?

The ministry has contacted the world’s leading shipbreaking, especially South Korea and Japan’s ship companies, which are among the top 3 countries in shipbuilding in the world. The ministry delegation along with the industry partners went to those countries and their delegation also came to India. Several rounds have also been discussed between the state governments and our ministry.

What is the plan with the state governments regarding shipbuilding and repair clusters?

All states with the beach have shown interest in developing shipbuilding clusters. The ministry is working closely with the state governments, DPIITs and major ports to mark potential places.

Read Also:  Bad news! BNP Paribas report is very negative regarding the stock market

After the announcement of the budget, how much investment is the government expecting to break the ships and their recycling sector?

The global market for ship breaking in 2023 was $ 3.98 billion and is estimated to increase from 8.2 CAGR to $ 7.64 billion by 2032.

Leave a comment