The Ministry of Ports, Shipping and Waterways has issued comprehensive operational guidelines for two landmark initiatives, the Shipbuilding Financial Assistance Scheme (SBFAS) and the Shipbuilding Development Scheme (SbDS), signalling a decisive policy push to revitalise India’s shipbuilding sector.
The notified framework lays out detailed procedures for funding, implementation, monitoring and oversight, marking a shift from ad hoc incentives to a structured, long-term industrial strategy. Officials said the guidelines are designed to create scale, reduce cost disadvantages faced by Indian yards, and attract sustained private investment into shipbuilding and allied industries.
The Shipbuilding Financial Assistance Scheme has been allocated a substantial budget of Rs 24,736 crore. Under the scheme, government support will range between 15 percent and 25 percent of the contract value per vessel, depending on the vessel category and technological complexity.
Disbursement of assistance will follow a strict stage-wise mechanism, linked to clearly defined construction milestones. To ensure accountability, beneficiaries will be required to furnish security instruments, and payments will be released only after verification of progress.
The framework also introduces additional incentives for series orders, encouraging shipyards to undertake bulk construction and achieve economies of scale. Independent valuation of vessels has been made mandatory to ensure transparency and prevent cost inflation.
To ensure coordinated development across ministries, shipyards and financial institutions, the guidelines provide for the establishment of a National Shipbuilding Mission. The proposed mission will act as the central coordinating body for policy implementation, technology upgradation, skill development and long-term planning in the sector.
Officials indicated that the mission would also play a role in aligning shipbuilding with national priorities such as coastal security, inland waterways expansion, green shipping and export competitiveness.
A notable feature of the new framework is the introduction of a Shipbreaking Credit Note. Under this provision, shipowners dismantling vessels at Indian ship recycling yards will receive a credit equivalent to 40 percent of the scrap value.
This credit can be utilised towards the construction of new vessels at Indian shipyards, effectively linking the ship recycling ecosystem with domestic shipbuilding. The move is expected to boost demand for new ships while strengthening India’s position as a compliant and competitive ship recycling destination.
Over the next decade, the Shipbuilding Financial Assistance Scheme is projected to facilitate shipbuilding projects worth nearly Rs 96,000 crore. Officials expect the scheme to generate significant employment across shipyards, ancillary manufacturing units, equipment suppliers, logistics providers and maritime services.
The government sees the sector as a high-multiplier industry capable of supporting skilled and semi-skilled jobs while reducing dependence on imported vessels.
Complementing SBFAS, the Shipbuilding Development Scheme has been allocated Rs 19,989 crore and is focused on long-term capacity and infrastructure creation. Under the scheme, the Centre will fund 100 percent of common infrastructure in new shipbuilding clusters, which will be developed through special-purpose vehicles involving both the Centre and State governments.
For existing shipyards, the scheme provides 25 percent capital support for modernisation and capacity expansion, enabling them to adopt advanced technologies and improve productivity.
The guidelines also propose the establishment of an India Ship Technology Centre under the Indian Maritime University. The centre will focus on research, innovation, design capabilities and skill development, addressing long-standing gaps in indigenous ship design and advanced marine engineering.
In addition, a Credit Risk Coverage Framework has been introduced to provide insurance cover against project-related risks, making shipbuilding projects more bankable and improving access to long-term financing.
Both SBFAS and SbDS will remain valid until March 2036, providing policy certainty to investors and shipbuilders. The framework also includes a provision for extension up to 2047, aligning the schemes with India’s long-term development vision.
