The Indian Government has sanctioned financial assistance of $20.13m (Rs1.55bn) for 47 ships under the Shipbuilding Financial Assistance Policy (SBFA).

The combined contract value of these vessels stands at $110.39m (Rs8.5bn).

As reported by the Economic Times (ET), the Indian Shipping Ministry has received 95 applications, seeking in-principle approval for 170 ships that carry a contract value of $340.26m (Rs26.2bn).

The policy’s guidelines were introduced on 1 April 2016 and are effective for shipbuilding deals signed from that date to 31 March 2026.

An official was quoted by ET as saying: “The focus of the policy is to make domestically produced ships competitive with Chinese ones. Till date, we have not rejected any request for financial assistance under the policy.

“Shipyards will have to make their own investments if they intend to undertake capacity expansion. The purpose of the policy is to support specific shipbuilding projects.”

Under the SBFA policy, 21 shipyards, including L&T Shipbuilding, Cochin Shipyard, Titagarh Wagons and Goa Shipyard, have registered under the scheme.

In a statement, the shipping ministry said: “Financial assistance is being granted to Indian shipyards equal to 20% of the lower of contract price or the fair price or actual payments received of each vessel built by them for a period of at least ten years commencing 2016-17. This rate of 20% will be reduced by 3% every three years.”

According to the policy, financial aid is only provided to ships that are built and delivered within three years from the contract date.

However, for specialised vessels, the Indian Government gives an in-principle approval for construction and delivery within up to six years.

Prior to the new policy, the government provided a shipbuilding subsidy scheme for Indian shipyards. This scheme expired in 2007.

The older scheme offered subsidies for domestic orders for vessels of 80m length and above that were secured through an international tender basis.

Furthermore, export orders could also receive subsidies.