Indian Government's financial aid package for local shipbuilders faces risk of reduction

The coverage provided by a government aid package crafted to support India's domestic shipbuilding industry is at risk of being reduced following a proposal by the country's Ministry of Finance (MOF).

The "shipbuilding financial assistance policy 2.0" (SBFAP 2.0), which had been announced in the national budget for FY2025-26, seeks to allocate up to INR180.9 billion (US$2.09 billion) in financial support to Indian shipyards for newbuilding contracts signed up to 2035.

However, Indian media outlets have reported that the final aid amount to be distributed may be lower than what the country's Ministry of Ports, Shipping and Waterways (MOPSW) had initially proposed.

Under SBFAP 2.0, Indian shipyards can receive 20 per cent financial assistance for building ordinary ships; 25 per cent financial assistance for building more complex ship types such as tankers and containerships; and an additional 30 per cent assistance for building ships fitted with "green" technologies.

The proposal by the MOF would see all ship types under SBFAP 2.0 receiving five per cent reductions in allowable financing, a move that local industry observers said would place the country's shipyards under "greater competitive pressure" from overseas.

The MOPSW has since prepared an appeal to the federal cabinet to reconsider implementing the proposed reductions.