To give a new lease of life to the shipbuilding industry, which has been in doldrums for the last few years, the Government plans to give the industry an infrastructure status along with tax benefits and financial grants.
"Giving the shipbuilding an infrastructure status will automatically increase its ability to use extra commercial borrowings. The Ministry of Shipping is compiling a list of shipbuilding companies, which need financial help, according to their urgency," a senior official from the Ministry of Shipping said.
Also, the Ministry has written to its defence counterpart to encourage Indian shipbuilding sector — both public and private sectors — by allowing domestic firms to build some of its vessels from a total order book that runs into over $92 billion (about `5.7 lakh crore).
"The only big orders are from the Defence Ministry, primarily the Indian Navy, which is helping the companies stay afloat. The Shipping Ministry is planning a slew of measures to give the industry the much needed thrust," said the official.
The stressed books of the shipbuilding companies are a big deterrent to getting new orders. "We are hoping to tackle that problem," the official maintained adding, "There are plans to give the industry an infrastructure status, financial assistance, broaden the domestic eligibility criteria, provide tax benefits and also give special dispensation for stressed ship yards."
He said, "It is very important to promote the shipbuilding industry as it has multiplier spin-offs on other ancillary industries such as steel, electronics, engineering and electrical equipment, port infrastructure, trade and shipping services."
In the past five years, the Shipping Corporation of India has placed orders for construction of 18 vessels. Of these, orders for eight vessels have been placed with Indian shipyards while 10 have been to foreign shipyards.
The Ministry of Shipping is also working on suggestions to promote local ship building industry under the 'Make in India' initiative. The Government is hoping to see a turn-around by the third quarter of this fiscal year, the official pointed out.
"Currently, the shipping building industry is in poor shape due to a fall in orders from shipping companies. We have learnt that a majority of companies are either running into severe losses or are undergoing corporate debt restructuring (CDR)," said the official.