MUMBAI : The government needs to set up a dedicated fund for capacity expansion of local shipyards which may help local shipyards increase the scale of operation and become globally competitive, said MVIRDC World Trade Center Mumbai after conducting a study to identify sectors where India has made extraordinary progress in exports and where there is still untapped export potential.
“Although the Government of India provided infrastructure status to the shipping industry in 2016, it has not addressed the financial woes of local shipyards,” the study document said.
There is huge potential for increasing domestic manufacturing capacity for cargo ships, tankers, cruise ships, tugboats, naval ships, fishing boats, and other special purpose vessels.
Although indigenous procurement of naval ships has gathered pace after the launch of the ‘Make in India’ program, India continues to depend on imports for cargo ships and ancillary parts used in ships. Currently, India ranks 16th in terms of global ship ownership and Indian ships carry just 1.3 per cent of the world’s export-import (EXIM) cargo.
As local shipbuilding activity develops, ancillary companies from foreign countries will set up units in India to cater to the increase in demand for parts and components.
“Indian shipping companies prefer to order ships made in foreign shipyards as the prevalence of GST and other local levies undermine the cost competitiveness of locally built ships. Indian ship operators need not pay import duty on the vessels being constructed at foreign shipyards. This differential taxation policy for locally made ships and foreign-built ships hinders the development of the domestic shipbuilding industry,” it said.
Indian shipyards have the capability to meet the growing demand for naval vessels and ships in Africa and Latin American countries. Identifying new export opportunities can increase the scale of domestic operations and hence the competitiveness of the local industry.
It added that all the coastal states should periodically review their maritime policy and should provide special emphasis on shipbuilding within the policy framework.
“Gujarat Maritime Board (GMB) has been at the forefront in promoting shipbuilding parks and clusters under its Shipbuilding Policy 2010. The Policy envisages government incentives for small enterprises to set up manufacturing units in clusters and common infrastructure facilities such as logistics to reduce the cost of operation.”
India may develop robust institutions and centers of excellence for promoting indigenous research and innovation in ship-building technology.
“We should also promote cross-border partnership in technology and joint innovation projects. India should also create more maritime skill development institutions to cater to the increasing demand for engineers and technicians in ship repair and shipbuilding sectors,” it further said.