Lok Sabha Question No. 6249 (UNSTARRED), answered on 2018-04-05
Subject: Shipbuilding Industry
Ministry: SHIPPING
Asked by: SHIVKUMAR CHANABASAPPA UDASI, Adhikari Dibyendu

## GOVERNMENT OF INDIA MTNISTRY  OF SHIPPING

## LOK SABHA

## USTARRED QUESTTON  NO. 6249 To BE ANSWERED oN 5'n ApRrL,2ot8 SHIPBUILDING INDUSTRY

## 6249. SHRI SHIVKUMAR UDASI: SHzu DIBYENDU ADHII(ARI:

Will the Minister  of SHIPPING be pleased  to state:

## qa qft+ea  d*

- (a) the present status of domestic  shipbuilding  industry in the country;
- (b) whether the Government  proposes to encourage local shipbuilding  industry and if so, the details thereof;
- (c) the initiatives  taken/being taken by the Government to encourage shipbuilding industry in the country;
- (d) whether it is a fact that the financial  assistance  to Indian Shipyard/PSUs  has constantly been decreased during the last four years and the current  year;
- (e) ifso, the details thereof,  and the reasons therefor; and
- (0 the budgetary  allocation made and funds utilised during the said period,  year-wise?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF SHIPPING (SHzu PON.RADHAKRISHNAN)

(a):  There are 8 public sector and 20 private sector  shipyards  in India. Out of the 8 public  sector shipyards,  2 are under the administrative control  of Ministry  of Shipping viz. Cochin Shipyard Limited, Kochi and Hooghly Dock and Port Engineers Limited, Kolkata. 4 are under the administrative  control of Ministry of Defence viz. Garden Reach Ship Builders  & Engineers Limited, Kolkata;  Goa Shipyard Limited, Goa; Hindustan  Shipyard Limited,  Visakhapatnam and Mazagon Dock Limited, Mumbai. The remaining two are under the administrative control of respective  State Governments viz. Alcock Ashdown (Gujarat) Limited, Bhavnagar, Gujarat and Shalimar  Works (1980) Limited, Kolkata. Among Public Sector shipyards, Cochin Shipyard Limited and Hindustan  Shipyard Ltd are major shipyards.  Among private sector shipyards, L&T shipyard  and Reliance Defence and Engineering  shipyard (formerly  Pipavav shipyard) are major shipyards.  Cochin Shipyard Limited  (CSL) has shipbuilding  capacity of (1,10,000  DWT) followed by Hindustan Shipyard Ltd (70, 000 DWT). Cochin shipyard  has built double hull aframax  tankers of 95,000 DWT and is currently building India's first indigenous  aircraft carrier.  L&T shipyard  has built defence vessels  and complex cargo vessels.  Pipavav shipyard  has the largest dry dock facility (662 meter long) in India and shipbuilding capacity  of 400,000 DWT, with capability to manufacture large size Bulk carriers, defence warships, offshore vessels  etc. At present, India has around 0.66% of global market share in shipbuilding.

(b) & (c): Government  of lndia has approved a policy for encouraging  Indian shipbuilding and shiprepair industry  on 09.12.2015, including financial  assistance for shipbuilding  and relaxation of domestic  eligibility  criteria.  Further, Infrastructure status has been granted to stand-alone shipyards by Ministry of Finance on 13.04.2016. Salient features  of the initiatives  taken by the Government  of India are given in Annexure-I.

(d) to (f): Details of variations in budgetary  allocations under the old subsidy scheme  (2002-2007) and the new Financial Assistance Scheme (2016-2026), and reasons thereof are given in AnnexureII.

## Salient features  of the initiatives taken/being  taken by the Government  to encourage shipbuilding industry in the country are as under:

## (i) Financial assistance policy for shipbuilding:

To promote Govemment of India's 'Make in India' initiative and to encourage  domestic shipbuilding by providing  a level playing field vis-a-vis foreign shipyards,  the Government had approved the Shipbuilding  Financial Assistance Policy for Indian Shipyards in December 2015. An initial budgetary requirement of Rs. 4,000 Crores for a period  of 10 years from 2016-17 to 2025-26  (plus 3 years or more, as the case may be, for spill over cases) was projected  for the policy.

Under the policy, financial  assistance  @20%  of the "Contract Price" or the "Fair Price" as determined  by international  valuers,  whichever is lower, is to be granted for any vessel built in India, subsequent to its delivery. Provided that, at the time of release of financial assistance,  if the actual payment received  for a vessel is lower than the contract  price or fair price, such payment shall replace the contract price or fair price  in the formulae  for computation of the financial assistance.  The quantum of financial assistance  shall reduce by 3Yo after every three years of the policy.

(ii) Relaxation  of domestic  eligibility  criteia/  grant  of right of first refusal  to Indian shipyards:

The Domestic Eligibility  Criteria  was also revised by the Government  to ensure  that all government departments  or agencies  procuring  vessels for governmental  purposes or for own purposes shall grant a fught of First Refusal  (RoFR) for Indian Shipyards for such order t1112025. From 2025 onwards, only Indian built vessels are to be procured  by these agencies for governmental purposes or for own pu{pose.  Similar benefits  will be applicable for repair of their vessels. Whenever acquisition  of a vessel(s)  is undertaken  through tendering route, the qualified Indian Shipyards  will have a "Right of first refusal" to enable  them to match the evaluated lowest  price offered by a foreign shipyard.

Technical qualification  of Indian shipyards will be based on the infrastructure availability and capability  of the shipyards to execute the shipbuilding  contract, rather than on any prior experience.

## (iii) Infrastructure status to standalone  shipyards:

Infrastructure status would enable Indian  shipyards  to avail cheaper  long-term source of capital and would enable  the shipyards to reduce  their cost disadvantage  and invest in capacity  expansion, thereby  giving a boost  to the Indian shipbuilding  industry.

## The budgetary allocation  made and funds utilised during the last 4 years and current year, year-wise  is given below:

| Financial Year   | Budgetary allocation made (Rs. in crore)   | Funds utilised   |
|------------------|--------------------------------------------|------------------|
| 2014-15          | Nil                                        | Nil              |
| 2015-16          | 43.0                                       | Nil              |
| 20r6-17          | 50                                         | Nit              |
| 2017-t8          | 10.0                                       | Nil              |
| 2018-19          | 30.0                                       | Nil              |

GOI had approved budgetary  provision  of Rs. 5200 Cr approx upto 31.03.2014 for liquidating the committed  liabilities  in respect  of the old shipbuilding  subsidy  scheme  (20022007). Since 16.06.2016, GOI is implementing the new shipbuilding f,rnancial  assistance policy (2016-2026).

The variation in the budgetary allocations during the last four years and the current year is due to varying estimates  for discharging committed  liabilities  under the old subsidy scheme and requirement  of financial  assistance under the new financial  assistance policy.