Private shipyards in India flag concerns over reduced incentives for green vessels under revised SBFAS

NEW DELHI : Small private Indian shipyards have expressed concern over the Union government’s decision to reduce financial incentives for electric, solar and other green vessels from 25 per cent to 15 per cent under the revised Shipbuilding Financial Assistance Scheme (SBFAS), warning that the move could slow the adoption of clean technologies and hamper India’s maritime decarbonisation efforts.

The concerns follow the issuance of the SBFAS Guidelines on December 25, under which industry stakeholders fear that reduced support for green propulsion technologies may dampen innovation, discourage investment, and weaken India’s push towards decarbonising coastal shipping and inland waterways.

Sandith Thandasherry, Founder of Kochi-based Navalt, India’s largest solar-electric boat manufacturer, described the revised scheme as a setback for the country’s electric vessel ecosystem. “SBFAS 2025 is one step forward and two steps back for India’s electric boat revolution,” he said. Navalt currently operates 40 solar-electric boats, has 37 under construction, and built Aditya, India’s first solar ferry, in 2017.

Under the original Shipbuilding Financial Assistance Policy (SBFAP) of 2016, incentives were primarily targeted at ocean-going vessels above 24 metres, with subsidy levels tapering from 20 per cent in 2016–19 to 11 per cent by 2025–26. Smaller vessels and electric boats were largely excluded from meaningful support.

In September 2025, the Union Cabinet approved the revised SBFAS, categorising electric and hybrid vessels as “Specialised” vessels. The scheme offers financial assistance of 15 per cent for the first ₹100 crore of contract value and 25 per cent for amounts beyond that threshold. However, industry sources noted that most electric vessels, typically priced between ₹20 crore and ₹80 crore, effectively receive only the 15 per cent subsidy—placing them on par with conventional diesel-powered vessels without any additional green incentive.

While contracts signed between September 2025 and March 2026 may still opt for the earlier SBFAP incentive of 20 per cent, approvals thereafter will be governed by SBFAS. “The effective subsidy for green vessels has been reduced by five percentage points, eroding the incentive for clean technology adoption,” Thandasherry said.

Sanjiv Walia, Chief Executive Officer of the Shipyards Association of India, which represents private shipyards across the country, echoed these concerns. He pointed out that despite India’s commitments to the International Maritime Organization’s Net-Zero 2050 targets, the revised guidelines do not provide any additional uplift for electric, solar or green vessels. “On the contrary, there is an effective reduction in subsidy, which could discourage the adoption of green technologies across ocean-going, coastal and inland segments,” he said.

Walia highlighted that nearly 90 per cent of India’s 11,000-km inland waterways network relies on small vessel operations, where electric and solar vessels can reduce emissions by 80–100 per cent and significantly cut dependence on imported diesel. He added that most small and medium shipyards in Kerala, Goa and Gujarat specialise in ferries, tugs and workboats with contract values below ₹100 crore.

The Shipyards Association of India has taken up the issue with the Shipping Secretary, seeking a review of the guidelines and amendments to provide targeted incentives for green vessels under SBFAS.

A government sour