"The Institutional Mechanism on Infrastructure chaired by Secretary, Department of Economic Affairs has recommended inclusion of shipyards undertaking shipbuilding and ship-repair under the harmonised list of infrastructure sectors," the Ministry of Shipping said in a statement today.
With this inclusion, the financial stress which the stand alone shipyards are experiencing will be eased substantially.
With the infrastructure status, shipyard industry will be able to avail flexible structuring of long-term project loans, long-term funding from infra funds at lower interest rates and longer tenure equivalent to the economic life of their assets, relaxed ECB norms, issuance of infrastructure bonds for meeting working capital requirements as well as benefits under Income Tax Act, 1961, the statement said.
The shipbuilding industry is a strategically important industry due to its role in energy security, national defence and for developing heavy engineering industry.
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"Currently the Indian shipyards employ about 30,000 persons which will go up substantially once this sector is revitalised," the statement said.
To promote the shipbuilding industry under the 'Make in India' initiative, the government last month approved a proposal for financial assistance of 20 per cent for ships built in the country.
The proposal included a policy for grant of financial assistance to shipyards, after delivery of ship, to counter cost disadvantages at 20 per cent of the contract price with a provision to reduce such assistance at 3 per cent every three years and will be given for all types of ships.
Besides grant of a Right of First Refusal for Indian shipyards for government purchases, tax incentives were given.
From 2025 onwards, only Indian-built vessels are to be procured by CPSUs for governmental purpose or for own purpose, the statement said.