Posted on April 19, 2023
The Ministry is working on a Rs 5,000 crore package to incentivize firms to build vessels. Per this scheme, the Indian government is going to provide Viability Gap Funding (VGF) to those firms that are keen on building such vessels.
Per a Mint report, the plan, currently under discussion, would focus first on developing an ecosystem to construct inland vessels for supporting cargo movements on national waterways.
VGF may be considered later for entities that are into manufacturing sea-bound vessels, including cruise vessels.
VGF is a capital grant from the government. It primarily targets large as well as long-term infrastructure projects that involve public-private collaborations. The grants play a vital role in making these projects viable commercially, encouraging private investments.
The objective of the program is to boost the manufacturing of inland vessels, catering to the transportation of goods and passengers throughout India’s expanding inland waterways network, which has increased from three to 22 between FY15 and FY23.
Besides, the scheme intends to promote coastal shipping. Per the report, there has been a massive rise in yearly cargo movement on Indian waterways, with an increase from 30 million tons (MT) in FY 2015 to over 116 MT in FY 2023, and is also anticipated to go up further, to more than 200 MT by 2030.
It has been estimated that the modal share of inland cargo movements will expand by 5% by 2030, necessitating the production of more vessels.
Recently, Sarbananda Sonowal, the Union Minister for Ports, Shipping, and Waterways, discussed the vision to extend greater financial support for encouraging vessel manufacturing.
He stated that following the policy of Ship Building Financial Assistance (SBFA), financial aid will be extended to India’s shipyards to promote the construction of advanced green vessels, extending to the production of all kinds of vessels.
This is to prepare India as an appealing destination for advanced and more unique vessel production. He also added that the policy involves developing the port as well as promoting shipbuilding across the nation, including ship repair, shipbuilding, and accessory facilities.