Shipyards now included in infrastructure category

The government has recommended inclusion of shipyards undertaking shipbuilding and repair under the infrastructure category.

With this inclusion, the financial stress which stand-alone shipyards are experiencing will be eased substantially. They also will be able to avail flexible structuring of long-term project loans, long-term funding from infrastructure funds at lower rates of interest and longer tenure equivalent to the economic life of their assets, relaxed external commercial borrowings (ECB) norms, issuance of infrastructure bonds for meeting working capital requirements as well as benefits under the Income Tax Act, 1961.

Earlier, to promote the shipbuilding and repair industry, the Union government had approved a financial assistance policy for shipyards. According to the policy, shipyards will be granted assistance amounting to 20 per cent of contract price or fair price, whichever is lower, (as assessed by three international valuers) of each vessel built by them for a period of at least ten years, commencing 2015-16. This will be reduced by three per cent every three years.

The promotion of the industry is important as it has the same impact as the infrastructure sector because of higher multiplier effect on investment and turnover and high employment potential.

Also, the industry is a strategically important industry due to its role in energy security, national defence and for developing heavy engineering industry.Currently the Indian shipyards employ about 30,000 persons which will go up substantially once this sector is revitalised.