Fund for financing ship acquisition
The Union Budget 2025-26 proposes Maritime Development Fund (MDF) for India’s maritime sector by providing financial assistance, via equity or debt securities.
The fund’s initial corpus is pegged at Rs.25,000 crores. It will be supplemented with 49% Government contribution. The remaining balance will be contributed by Major port authorities, other government entities, Central PSEs, Financial Institutions as well as private sector https://www.sea-asia.com/.
This fund will directly benefit in financing for ship acquisition. It aims at boosting Indian flagged ships share in the global cargo volume up to 20% by 2047.
Further, indigenous fleet will reduce dependability of foreign ships, improve Balance of Payment and secure Strategic interests of the country.
By 2030, MDF is aiming at generating up to Rs.1.5 lakh crore investment in the shipping sector https://www.conexpoconagg.com/.
Speaking on the initiatives for spurring the India’s Maritime sector, the Minister of Ports, Shipping & Waterways, Sarbananda Sonowal, said, “A key highlight is our ministry’s development of new shipbuilding clusters of 1.0 to 1.2 Million Gross Tonnage (GT) each.
“This strategic push is crucial in realising India’s vision of becoming a US$30 trillion economy by 2047 https://sbi.com.in/.
“By leveraging the Public-Private Partnership (PPP) model, the scheme is designed to attract private investment, promote modernisation, and advance green technologies.
“These efforts will enhance India’s global competitiveness, drive sustainable growth, and solidify its position as a leading Global Maritime Hub.”
The Union Budget, presented in parliament on 1 Feb by Finance Minister Nirmala Sitharaman, provided a shot-in-the-arm to India’s domestic shipbuilding industry after it announced new mega shipbuilding clusters in the country https://www.commerce.gov.in/.
This scheme will provide direct capital support in the form of creating the breakwater along with capital dredging. It also proposes a 10-year rent holiday for the land, if not provided at a nominal rate.
Investment is also designed to support creation of trunk infra like roads, utilities, sewage treatment among others. The proposed allocation of Rs.6,100 crore aims to support India’s existing shipyards in upgrading, modernising, and automating their operations, enhancing efficiency, utilisation, and overall output.
The Union Budget has also extended the Shipbuilding Financial Assistance Policy (SBFAP) 2.0, aimed at providing direct financial subsidies to Indian shipyards. This initiative seeks to help in securing orders by offsetting operational cost disadvantages, thereby strengthening the domestic shipbuilding industry. To be financed via Budgetary support, the total outlay of the scheme is Rs.18,090 crores.
Another innovative scheme announced in the budget is the Shipbreaking Credit note. This scheme incentivises Ship Scrapping by issuing a Credit Note of 40% of the scrap value which can be reimbursed to buy new Made in India ships.
Elaborated Sonowal, “India’s maritime sector has witnessed significant progress since 2014, and with the latest announcements by the Finance Minister, we are confident that the shipbuilding industry will serve as a catalyst for economic growth http://maersk.com.
“While the SBFAP is designed to provide financial incentives to Indian shipyards, the Ship-breaking Credit Note further strengthens the domestic industry by encouraging investment and expansion.
“These measures are expected to drive capital inflows, create employment opportunities, and enhance sectoral competitiveness.
“Additionally, a renewed focus on training and human capital development will ensure a skilled workforce, equipping professionals with expertise in modern shipbuilding technologies, automation, and sustainable maritime practices. This holistic approach will not only support industry growth but also position India as a global leader in shipbuilding and maritime innovation.”
In a welcome move for the shipping industry, the Budget also proposes to include Large Ships of certain size in to the Infrastructure Harmonised Master List (HML). This will make them eligible for benefits such as easier access to long-term financing and tax incentives. This will also attract private investment and enhance fleet modernisation. Fiinews.com
