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Shaping a Self-Reliant Indian Shipbuilding Industry

Indian shipbuilding industry

In this pandemic year, India has embarked on a journey to achieve self-reliance in many spheres. The account of how India is looking at developing an indigenous market in toys, pharma, railway coaches etc is explained at length in our previous article Vande Bharat and Beyond – How India’s Aatmanirbhar Mantra is Challenging China’s Market Dominance. Another potential area in which India is looking to build its capacity is in shipping sphere. Ancient India had arguably achieved the heights in global shipbuilding, the legacy that slipped away from India in the last hundred years or so.

Review of Right of First Refusal to Encourage Shipbuilding

Ministry of Shipping has reviewed the RoFR (Right of First Refusal) licensing conditions for chartering of vessels/Ships through tender process for all types of requirements. Now, priority in chartering of vessels is given to vessels built in India, flagged in India and owned by Indians under the amendments in the guidelines of RoFR.  This is expected to promote the demand of the ships built in India.

RoFR would be applied in the following manner:

  1. Indian built, Indian flagged and Indian owned
  2. Foreign built, Indian flagged and Indian owned
  3. Indian built, foreign flagged and foreign owned

Here is how the category is decided.

  • All vessels flying the flag of India (i.e. registered in India) up to the date of issue of new circular by the Director General of Shipping shall be deemed to be Indian built vessels and will fall in category (i) above and
  • The foreign flagged vessels permitted by DG (Shipping) under Section 406 of the Merchant Shipping Act, 1958 for chartering by an Indian citizen/company/society, who is building a ship in an Indian shipyard for registration under the Indian flag, as a temporary substitute for the Indian ship under construction, meeting the following two conditions shall be deemed to fall under Category (i) above.
    1. 25% of the contract money has been paid to the Indian shipyard
    2. 50% of the hull fabrication has been completed, as certified by Recognised Organisation.

Though it may be argued that India has much to travel before it can regain the lost ground, there are many steps that were taken earlier as well which are collectively shaping a larger picture. As we discussed in an earlier article, there is an initiative between India and Russia to develop maritime corridor with a special focus on shipbuilding is underway. There are fresh orders for Indian industries to build ships for Norway. A long-term subsidy has also been provided under the Shipbuilding Financial Assistance Policy (2016-2026).

All these steps put together are taking India towards building an Aatmanirbhar shipbuilding industry.

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