Small private Indian shipyards have raised concerns over the Centre’s decision to reduce financial incentives for electric, solar and other green vessels to 15 per cent from 25 per cent, warning that the move could discourage shipowners from adopting clean technologies and slow India’s maritime decarbonisation efforts.
The concerns follow the issuance of the Shipbuilding Financial Assistance Scheme (SBFAS) Guidelines on December 25. Industry sources said the revised policy risks dampening innovation, undermining investments in green propulsion, and weakening India’s push to decarbonise coastal shipping and inland waterways.
“SBFAS 2025 is one step forward and two steps back for India’s electric boat revolution,” said Sandith Thandasherry, Founder of Kochi-based Navalt, the country’s largest solar-electric boat manufacturer. Navalt currently has 40 solar-electric boats in operation and 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 aimed at ocean-going vessels above 24 metres, with support gradually declining from 20 per cent (2016–19) to 11 per cent (2025–26). Small boats and electric vessels were largely excluded, Thandasherry said.
In September 2025, the Union Cabinet approved the revised SBFAS, under which electric and hybrid vessels were classified as “Specialised” vessels. While the scheme provides a subsidy of 15 per cent for the first ₹100 crore of contract value and 25 per cent for the amount beyond that, most electric boats—typically costing between ₹20 crore and ₹80 crore—effectively qualify only for the 15 per cent support. This places them on par with conventional diesel vessels, with no additional “green” incentive.
Contracts signed between September 2025 and March 2026 may still opt for the older SBFAP incentive of 20 per cent, but approvals beyond that period will fall under SBFAS. “The policy signal is that green technology no longer receives special treatment,” Thandasherry said. “The subsidy has effectively been cut from 20 per cent to 15 per cent, erasing the green premium.”
Sanjiv Walia, CEO of the Shipyards Association of India, which represents private shipyards , echoed these concerns. Despite India’s commitments to the International Maritime Organization’s Net-Zero 2050 targets, the current guidelines do not offer any additional uplift for electric, solar or green vessels, he said. “On the contrary, there is an effective reduction of 5 per cent in subsidy, which is likely to discourage adoption of EV and green technologies for ocean-going, coastal and inland vessels.”
Walia pointed out that nearly 90 per cent of India’s 11,000-km inland waterways network depends on small vessel operations. Electric and solar vessels can cut emissions by 80–100 per cent and reduce reliance on imported diesel, making them critical to India’s sustainability goals. Most small and medium shipyards in Kerala, Goa and Gujarat specialise in ferries, tugs and workboats costing under ₹100 crore, he added.
The Shipyards Association of India has taken up the matter with the Shipping Secretary, seeking a review of the guidelines and amendments to provide meaningful incentives for green vessels under SBFAS.
A government source, however, defended the revised structure, stating that larger commercial green vessels receive higher absolute support, while smaller vessels qualify for 15 per cent assistance. “It is a fair policy. Industry needs to think big and be realistic,” the source said.
