The Central government will extend capital support of up to 25% of the Fair Assessed Project Cost (FAPC) for brownfield shipyard expansion projects, according to draft guidelines issued by the Ministry of Ports, Shipping and Waterways. The assistance will be offered under the ₹19,989-crore Shipbuilding Development Scheme (SbDS) approved by the Union Cabinet on September 24, 2025.
A total of ₹8,261 crore has been earmarked specifically for brownfield expansions aimed at strengthening India’s shipbuilding capacity through modernisation, additional infrastructure, and improved production capabilities.
Eligibility and Scope
The capital support will be available to Indian shipyards registered under Central or State Acts, with a minimum operational history of three years. Expansions undertaken within or adjacent to existing yards, or at distant locations—including joint venture facilities—will qualify as brownfield expansions, provided they are established under the same legal entity and name for at least one year prior to application.
Eligible projects include creation or enhancement of dry docks, slipways, block and modular fabrication units, cranes, and other critical immovable infrastructure essential for large-scale commercial shipbuilding.
Shipyards located within approved greenfield shipyard clusters run by special purpose vehicles will not be eligible for separate brownfield assistance.
Fair Assessed Project Cost Framework
The FAPC will be determined as the lowest among:
The project cost stated in the detailed project report,
The cost assessed by an Independent Evaluation Agency,
The actual capital expenditure certified by a chartered accountant.
Implementation Timeline and Obligations
The Ministry has emphasised rapid capacity expansion, targeting 2–4 years for project implementation. Shipyards receiving capital assistance must operate the upgraded facilities for a minimum of 10 years after completion.
Four-Tranche Disbursement Structure
Funds will be released as grants in four instalments linked to milestone-based progress:
20%: Upon award of work and statutory clearances
30%: After 15% physical progress and 75% utilisation of the first instalment
30%: After 40% physical progress and 75% utilisation of cumulative funds
20%: After 100% physical progress and submission of completion certification
In exceptional cases, the final instalment may be released after 70% physical progress, subject to a 5% retention until project completion.
The Central government will not provide financial guarantees or sovereign assurances for projects supported under the scheme.
No Duplication of Government Support
The SbDS forbids overlapping of financial support from other Central or State schemes for the same project components. Applicants must provide a self-declaration confirming exclusive funding. However, shipyards may still avail general fiscal or locational incentives, such as tax rebates or production-linked incentives, as long as they do not overlap with SbDS components.
Focus on Core Infrastructure
Ancillary industry development will not be eligible under the brownfield component, as such support is considered part of greenfield cluster development.
A government official noted that the guidelines aim to accelerate domestic shipbuilding capacity, enabling Indian shipyards to modernise faster and position themselves competitively in global markets.
