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Cochin Shipyard works on aircraft carrier

Mandaviya: revitalize shipbuilding


Mandaviya: revitalize shipbuilding

Cochin Shpyard

The State-owned Cochin Shipyard Limited is constructing an Indigenous Aircraft Carrier which will boost India’s national defence.

This was stated in an in a written shipyard industry update in Rajya Sabha on 25 Nov 2019 by Minister of State for Shipping Mansukh Mandaviya.

Further, some shipyards are also building various types of defence vessels such as warships, submarines, corvettes, missile boats, offshore patrol vessels, floating border outposts, among others, he said underlining the importance of the industry.

Also, shipbuilding industry promotes indigenous development of complex design and engineering skills which are essential for sustenance and growth of indigenous defence capabilities, he said.

Nearly 65% value of the built ship is contributed by heavy engineering industry such as steel, electronics, engineering and electrical equipment, port infrastructure as well as trade and shipping services, Mandaviya pointed out.

He also gave an update on steps taken by Ministry to promote shipbuilding industry and develop ancillary industries.

These are:

(i) Financial Assistance Policy on Shipbuilding: To promote shipbuilding in Indian shipyards, the Cabinet has on 9 December 2015 approved New Shipbuilding Financial Assistance policy for Indian shipyards for contracts signed during a 10-year period, viz. 2016-2026, with budgetary projections of Rs.4,000 crore for this period.

(ii) Right of Refusal to Indian Shipyards: The Union Cabinet has approved on 9 Dec 2015 that all government departments or agencies including CPSUs have to provide Right of First Refusal to Indian shipyards while procuring or repairing vessels meant for governmental or own use till 2025, after which only Indian shipyards would build and repair vessels for above mentioned organisations. The modified guidelines have been uploaded on website of Ministry in February 2019.

(iii) Grant of Infrastructure Status: The Department of Economic Affairs has notified the inclusion of standalone ‘Shipyards’ in the Harmonized Master List of Infrastructure Sub-sectors on 13 April 2016. With this inclusion, shipyards will be able to avail flexible structuring of long term project loans, long term funding from Infrastructure Funds at lower rates of interest and for a longer tenure equivalent to the economic life of their assets, relaxed ECB norms, and issuance of infrastructure bonds for meeting working capital requirements.

He also stressed on the need to revitalize the industry and substantial increase employment. It currently employs around 30,000 people.

Among manufacturing activities, shipbuilding has one of the highest employment multipliers, which is 6.4. It is capable of generating mass employment in remote, coastal and rural areas, thereby absorbing the labour migrating from farm fields into manufacturing facilities which are set up by shipyards and their ancillaries.

He further informed that the industry is a strategically important industry due to its role in energy security, national defence and development of heavy engineering industry.

However, shipbuilding is primarily an order driven industry and each vessel is built on order.

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