Sagarmala NBFC to tap maritime development fund for up to ₹15,000 crore

The NBFC will tap into the MDF - one of the three pillars of the Rs 69,725 crore shipbuilding package - which was created as a financial umbrella for various areas

With cabinet approval for the ₹25,000 crore Maritime Development Fund (MDF) in place, India’s first maritime finance lender — state-owned Sagarmala Finance Company (SMFCL) — will start lending with a sizable portion of the fund allocated for critical port infrastructure and shipbuilding projects.

 

“Under the new package (approved on Wednesday), SMFCL will have access to a sizeable portion of MDF’s financing window, with an initial lending capability expected in the range of ₹10,000-15,000 crore, to support port-linked logistics, coastal shipping, and shipyard-linked infrastructure,” Union shipping minister Sarbananda Sonowal told Business Standard.

 

The project launched solely to address India’s maritime funding gap will be empowered with additional resources, operating as a maritime-focused non-banking finance company (NBFC). It will be empowered to co-lend, guarantee, and catalyse project finance. On June 19, the Reserve Bank of India granted SMFCL, rechristened from Sagarmala Development Corporation, the registration to that effect.

 

The NBFC will tap into the MDF — one of the three pillars of the ₹69,725 crore shipbuilding package — which was created as a financial umbrella for various areas where the government wants to infuse capital.

 

MDF has two components; the Maritime Investment Fund with an initial corpus of ₹20,000 crore and contributions from other investors. Its remit will be to invest through equity financing to enhance Indian tonnage, develop shipyards, ship repair and more.

 

The ₹5,000 crore Interest Incentivisation Fund — MDF’s second element – will provide an incentive of up to 3 per cent, to be provided to banks or financial institutions for loans given to Indian shipyards, to provide cushion to global manufacturers against the higher cost of financing shipbuilding in India as compared to major maritime economies. 

 

Sonowal said that many leading domestic financial institutions and global maritime investors have already expressed interest in co-investing in MDF. Formal announcements will be made after approvals are complete. “The unique features, like first-loss cover, benchmark returns, and blended-finance framework, have worked towards creating interest,” he said.

 

A week before the cabinet approval, SMFCL signed multiple pacts with financers like the National Bank for Financing Infrastructure and Development (NaBFiD), IIFCL, and the Hague-headquartered Climate Fund Managers to be fund managers for MDF.

 

According to the shipping ministry, SMFCL will offer tailored financial products — including short, medium, and long-term funding — to a diverse range of stakeholders such as port authorities, shipping companies, MSMEs, startups, and maritime educational institutions. The NBFC will also eventually fund renewable energy, cruise tourism, and maritime education

 

The NBFC has already signed agreements for co-investing and debt financing. Pipavav Shipyard-owner Swan Defence and Heavy Industries (SDHI) signed a pact to jointly explore projects, including newbuilds, ship repairs and infrastructure, for support under maritime focused equity fund.

 

The two will conduct feasibility studies covering project design, yard capacity, vessel types, and technology integration and develop a financing plan covering capital structure, equity, debt, and credit enhancements, while identifying co-financiers such as multilateral institutions, government agencies, and private investors.

 

Under the Maritime Amrit Kaal Vision 2047, India aims to spend over ₹54 trillion to become one of the top five shipbuilders in the world by the target year. Currently, it accounts for only 0.06 per cent of the global shipbuilding market. 

 

The cabinet package running up to 2035 will facilitate the production of 2,500 vessels to expand capacity and replace India’s current ageing vessel fleet.