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Financial Assistance Policy for Shipyards

Financial Assistance Policy for Shipyards

Financial Assistance Policy for Shipyards

The Government of India (GoI) introduced guidelines for the grant of financial assistance policy to shipyards. The policy was titled as Guidelines for Implementation of Shipbuilding Financial Assistance Policy. The financial assistance is provided for vessels that are built in India. The policy was released by the Ministry of Shipping and applicable to all the Indian Shipyards. The financial assistance shall be provided on the Contract Price as decided by the International companies. The Contract Price will apply only for the ships that are built in India. The policy is active from 1st April 2016 to 31st March 2026.

Grievance Redressal

Apart from providing financial support for the shipbuilding industries, the policy also envisioned to create Grievance Redressal Forum to address primary issues faced by the shipbuilding industries. The policy shall create an institutional mechanism to address grievances as per the notification from the Ministry of Shipping.

The Ministry shall also notify the procedure for filing and resolution of the requests to create uniformity. The guidelines shall be reviewed by the Ministry every two years to resolve the issues quickly and adapt to the changes. In the case of any disputes in the guidelines, the Minister for Shipping shall resolve the disputes.

Terms and Conditions for Financial Assistance

  • If the shipyard has signed for more than one vessel, the contract shall apply to those which falls under the stipulated timeframe. If it falls under the timeframe, the contract should be approved by the concerned authority.
  • The contract should state that the construction or manufacture of the vessel shall be completed within three years from the time of initiation as mentioned in Clause 3
  • If in any case, the shipyard extends the contract after 31st March 2026, the financial assistance shall not be applicable
  • The financial assistance shall be provided to shipyards only if the major part of the vessel is manufactured or constructed in India. Installation and commissioning the major part must be made in India.
  • Testing can be performed in countries outside India if required. However, it should be stated in the contract.
  • The company applying for financial assistance through this policy should not have applied for other financial support from the State or Central Scheme for the said vessel. The following are the support that shall not include:
    • Exemptions of domestic taxes or import duties applicable on purchase of raw materials, capital goods or components.
    • If any fiscal or financial benefits arising from the location of the shipyard.
    • If any fiscal or financial benefits arising from infrastructure grant for the shipyard or
    • Any other financial benefits available to the shipyard despite the type of vessel being constructed or being fixed. The guidelines mentioned above should be followed to acquire financial assistance.
  • Shipyards applying for the financial assistance shall provide documents and affidavit as prescribed in Annexure-I and Annexure-II. The annexes should be attached with a certificate attested from a recognised organisation, as mentioned in Annexure-II.

List of Specialised Vessels

The following are the List of Specialised Vessels as mentioned in Schedule-II of the policy:

  • Liquefied Natural Gas (LNG) Carrying Vessels
  • Liquefied Petroleum Gas (LPG) Carrying Vessels
  • Passenger Vessels under MS Act/SOLAS with a minimum capacity of 500 passengers
  • Chemical Tankers
  • Floating or Submersible Drilling or Production Platforms
  • Floating, Production, Storage and Offloading (FPSO) units
  • Floating, Storage and Offloading (FSO) units
  • Floating, Storage, Regasification Units (FSRUs)
  • Mobile Offshore Drilling Unit (MODU) Rigs
  • Mobile Offshore Production Units

Excluded Vessels from the Financial Assistance Policy

The following are the vessels that are excluded from financial support:

  • Vessels built by an Indian buyer or manufacturer that does not exceed more than 24 meters
  • Vessels made up of wood regardless of the length
  • Any vessels built for defence or navy purposes
  • Vessels built under contracts as required by the Central or State Government or agencies of State or Central Government

Procedure for Obtaining ‘In Principle’ Approval as per Annexure-I

  • To acquire ‘In Principle’ approval, the concerned individual shall apply forty-five days before the signing the contract.
  • The application should be made in the web portal and acquire the unique application number.
  • The unique application number shall be applicable for contracts registered after 1st April 2016. The date of issuance must be after October 2017 or software that was updated correspondingly.
  • After receiving the unique application number, the applicant shall apply for ‘In Principle’ approval within forty-five days from the generation of unique application number.
  • In the case of the vessels being constructed by the manufacturer does not match with the list provided, the applicant shall acquire details of five valuers randomly listed by the portal. The list shall be used to assess the value of the vessel. The list should detail, as mentioned in Schedule-III. After verification, the ‘In Principle’ approval shall be provided. The applicant shall provide the details within forty-five days and provide the necessary documents mentioned below:
    • Notarised copy of the contract
    • Technical specifications of the vessel
    • Details of the bank account
    • An affidavit signed by the CEO, chairman or of equal rank and to be attached as per Annexure-IA
  • The valuation certificates must be obtained as per Schedule III and shall be accepted by the DG of Shipping. The details can also be uploaded in the portal.
  • If any of the selected values (more than two) does not respond to the request, the applicant shall select a fresh list from the portal and provide the details within forty-five days.
  • The applicant shall reapply for the ‘In Principle’ approval with the newly provided five valuers along with the three valuers provided earlier. The application must be made within forty-five days from the selection of valuers.
  • If the applicant is unable to provide the details from the self-generated valuers, the DG of Shipping shall constitute an expert committee as recommended by the Ministry of Shipping.
  • The application will be reviewed within thirty days from the date of submission for the ‘In Principle’ approval.
  • In the case of needing additional or incorrect documents, the committee shall redirect to the applicant. The process shall be made through the web portal only.
  • The committee shall make a decision within thirty days from the submission of the receipt.
  • Eligibility of the Vessel for Financial Assistance
  • The vessel in the contract must be constructed within three years from the date of the contract
  • The applicant shall acquire prior approval from the authority for specialised vessels
  • Construction of specialised vessels shall not exceed more than six years

Estimation of Financial Assistance

  • The financial assistance under this policy shall not exceed more than Rs.40 crores per vessel.
  • If a global tender is in place, the value shall be converted into Indian Rupees.
  • The financial assistance shall be provided in Indian Rupees only.

Rate of Financial Assistance

The following are the rates for financial assistance against the value of the vessel:

S. No.Financial YearRate of Financial Assistance (%)
12016-201720.00
22017-201820.00
32018-201920.00
42019-202017.00
52020-202117.00
62021-202217.00
72022-202314.00
82023-202414.00
92024-202514.00
102025-202611.00

 

 

 

 

 

 

 

 

 

Documents to be Submitted for Release of Grants

  • Delivery and Acceptance protocol of the Vessel
  • Actual Payment Certificate certified by a registered CA
  • Builder’s Certificate
  • Export Clearance Certificate
  • Indemnity Bond
  • Affidavit as per Annexure-I and Annexure-II

For more details on grants, scroll below

Financial-Assistance-Policy-for-Shipyards

Post by Peter

Peter is a Senior Content Writer and Copy Editor in Finance specializing in GST and Import & Export. He has also written articles on Medical, Philosophy, and Literature and published research papers in international journals.

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