Lok Sabha Question No. 482 (STARRED), answered on 2025-04-04
Subject: Operational Capacity of Shipbuilding Sector
Ministry: PORTS, SHIPPING AND WATERWAYS
Asked by: Shri Appalanaidu Kalisetti

## GOVERNMENT OF INDIA MINISTRY OF PORTS, SHIPPING AND WATERWAYS

## LOK SABHA STARRED QUESTION NO. *482

ANSWERED ON 04.04.2025

## OPERATIONAL CAPACITY OF SHIPBUILDING SECTOR

- *482.SHRI APPALANAIDU KALISETTI:

Will the Minister of PORTS, SHIPPING AND WATERWAYSbe pleased to state: पȅन , पोत पįरवहन और जलमागŊ मंũी

- (a) the current operational capacity of the shipbuilding and ship repairing sector in the State of Andhra Pradesh; and
- (b)  the  key  challenges  being  faced  and  the  policy  initiatives  or  incentives  under consideration in the said sector?

## ANSWER

MINISTER OF PORTS, SHIPPING AND WATERWAYS (SHRI SARBANANDA SONOWAL)

- (a) to (b) A Statement is laid on the Table of the House.

STATEMENT REFERRED TO IN REPLY TO PARTS (a) TO (b) OF THE LOK SABHA STARRED QUESTION NO. *482 ANSWERED ON 4 TH  APRIL, 2025 RAISED BY SHRI APPALANAIDU KALISETTI REGARDING 'OPERATIONAL CAPACITY OF SHIPBUILDING SECTOR'

(a) &  (b)  In  the  State  of  Andhra  Pradesh,  shipbuilding  and  repair  activities  are predominantly concentrated in the Kakinada and Visakhapatnam regions. Commercial shipbuilding in Andhra Pradesh is largely limited to small vessel construction, with the exception of Hindustan Shipyard Limited (HSL), which handles larger vessels.

Hindustan  Shipyard  Limited,  a  PSU  under  the  Ministry  of  Defence,  and  several private players such as San Marine Shipyard, Matt Marine, Om Sai Marine, &Seacon Engineering  Projects  operate  in  the  ecosystem,  offering  specialized  and  seasonal services.

Government  of  Andhra  Pradesh  has  issued  the  Andhra  Pradesh  Maritime  Policy, 2024  through  G.O.MS.No.21  dated  11.12.2024.    One  of  the  pillars  of  this  policy  is Shipyard  and  Cluster  Development  for  establishing  modern  shipyards  and  repair facilities,  promoting Innovation and Technology Adoption, and attracting investment in shipbuilding and ship-repair sector under Shipyard & Cluster Development.

Some of the incentives for this pillar in the policy include conducting pre-feasibility study for location identification, Centralized land aggregation, development and allocation,  Tax  Benefits,  Subsidies  and  Financial  Support,  Exemption  of  WFR(Water Front Royalty), Reimbursement of Stamp Duty and Registration Fee, SGST Exemptions, Exemption from Electricity Duty etc.

Government of Andhra Pradesh has floated an EOI for development of shipbuilding clusters within the state which will enhance shipbuilding and allow global shipbuilders to participate in shipbuilding activities in the state.

Government  of  India has  taken  several  steps  to  upgrade  and  modernize  the shipbuilding activities in the country, as listed below:

(i) Ministry  of  Ports,  Shipping  and  Waterways  has  amended  the  Shipbuilding Financial  Assistance  Policy  (SBFAP)  guidelines  on  29.01.2025  to  encourage  more participation in the shipbuilding activities.

(ii) The Government, in November, 2021, has released Standard Tug Designs of five variants for use by Major Ports for procurement of tugs to be built in Indian Shipyards.

(iii) To  promote indigenous shipbuilding, the Ministry of Ports, Shipping and Waterways on 20.09.2023 has revised the hierarchy of Right of First Refusal (RoFR) to be  followed  in  any  kind  of  charter  of  a  vessel  which  is  undertaken  through  a  tender process.

The revised hierarchy of RoFR is:

- (1) Indian built, Indian flagged and Indian owned
- (2) Indian built, Indian flagged and Indian IFSCA owned
- (3) Foreign built, Indian flagged and Indian owned
- (4) Foreign built, Indian flagged and Indian IFSCA owned
- (5) Indian built, foreign flagged and foreign owned

(iv)  Ministry  of  Ports,  Shipping  &  Waterways  has  launched  the  Green  Tug  Transition Programme (GTTP), which aims to reduce carbon emissions and minimize environmental impact by encouraging adoption of environmentally sustainable operations, with these tugs built in Indian shipyards.

(v) Government has launched the HaritNauka guidelines for inland vessels which aim to promote the adoption of greener technologies in inland waterway vessels.

(vi)  Government  of  India  vide  Gazette  Notification  No.  112  dated  April  13,  2016  has included  'Shipyards'  in  the  updated  Harmonized  Master  List  of  Infrastructure  Subsectors.

(vii) In order to promote indigenous shipbuilding, Government has issued guidelines on 19.05.2016 for evaluating and awarding tenders for new shipbuilding orders floated by government departments or agencies including public sector undertakings for acquisition of any type of vessel(s) used by them for Governmental purposes or for their own use. 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 the foreign shipyard which is aimed at increasing ship building activities in Indian shipyards.

Further, the Government entities dealing with ship building and ship-owning are advised  to  ensure  local  content  as  per  the  Government  of  India  Public  Procurement (Preference to Make in India) Order, 2017. As per this Order, procurement of ships of less than ₹200 crores is required to be from Indian shipyards.

(viii) In the Union budget speech, 2025, the following announcements have been made:

-  The Shipbuilding Financial Assistance Policy  will be revamped  to address cost disadvantages.  This  will  also  include  Credit  Notes  for  shipbreaking  in  Indian yards to promote the circular economy.
-  Large  ships  above  a  specified  size will  be  included in the infrastructure harmonized master list (HML).
-  Shipbuilding  Clusters  will  be  facilitated  to  increase  the  range,  categories  and capacity of ships. This will include additional infrastructure facilities, skilling and technology to develop the entire ecosystem.
-  For long-term financing for the maritime industry, a Maritime Development Fund with  a  corpus  of  Rs.  25,000  crores  will  be  set  up.  This  will  be  for  distributed support and promoting competition. This will have up to 49 per cent contribution by  the  Government,  and  the  balance  will  be  mobilized  from  ports  and  private sector.
-  To  continue  the  exemption  of  Basic  Customs  Duty  (BCD)  on  raw  materials, components, consumables or parts for the manufacture of ships for another ten years.

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