India will set up a 250-billion-rupee ($2.9-billion) maritime development fund for the long-term financing of the country's shipbuilding and repair industry, Finance Minister Nirmala Sitharaman said on Saturday.
The South Asian nation is spending billions of dollars to refurbish infrastructure in an effort to become a world-class manufacturer as Prime Minister Narendra Modi aims for India to be a developed nation by 2047, the country's 100th year anniversary of independence.
The government will contribute 49 per cent of the fund and mobilise the remainder from ports and the private sector, Sitharaman said in presenting budget proposals for the fiscal year from April 1.
India's shipping fleet has not kept pace with its surge in trade, including imports of energy and exports of refined oil products.
The government plans to set up a new shipping company with participation from oil refiners and Shipping Corp of India to expand its fleet to cut freight payments to foreign carriers, Reuters reported last year.
Shipping Corp's shares rose 3.8 per cent after the budget announcement.
The governments will also promote shipbuilding clusters to increase the range, categories and capacity of ships, Sitharaman said. "This will include additional infrastructure facilities, skilling and technology to develop the entire ecosystem."
India will also issue credit notes for shipbreaking in Indian yards to incentivise the scrapping of old vessels and building of new ones.
Sitharaman announced an extension of import tax exemption by 10 years on inputs needed for ship building and ship breaking activities.
(Reporting by Nidhi Verma; Editing by William Mallard)