Shipbuilding has one of highest employment multipliers: Mansukh Mandaviya

In a written reply to a question in Rajya Sabha today the Minister of State for Shipping (I/C) and Chemical & Fertilizers Shri Mansukh Mandaviya informed that the Indian shipyards employ around 30,000 people at present which will substantially go up once this sector is revitalized. Among manufacturing activities, shipbuilding has one of the highest employment multipliers, which is 6.4. It is capable of generating mass employment in remote, coastal and rural areas, thereby absorbing the labor migrating from farm fields into manufacturing facilities which are set up by shipyards and their ancillaries. With the revitalization of this sector and with consistent orders on shipyards, more manpower will be required and it is expected to increase employment.

He further informed that the Shipbuilding industry is a strategically important industry due to its role in energy security, national defense, and development of the heavy engineering industry. However, shipbuilding is primarily an order-driven industry and each vessel is built on order. The details are given below:

(i) The shipbuilding industry is very strategic for any country owing to the significance of ships in both trade and also national defense. Ships play a major role in the transportation of oil and gas and most of the crucial commodities which run the economy. The shipbuilding industry provides facilities for building various types of ships/vessels such as oil tankers, bulk carriers, cargo vessels, gas carriers, and product carriers, etc.

(ii) Cochin Shipyard Limited, a PSU under the administrative control of the Ministry of Shipping is constructing an Indigenous Aircraft Carrier which will boost India’s national defense. Further, some shipyards are also building various types of defense vessels such as warships, submarines, corvettes, missile boats, offshore patrol vessels, floating border outposts, etc. The shipbuilding industry promotes indigenous development of complex design and engineering skills which are essential for sustenance and growth of indigenous defense capabilities.

(iii) Nearly 65% value of the built ship is contributed by heavy engineering industry such as steel, electronics, engineering and electrical equipment, port infrastructure as well as trade and shipping services. The promotion of the shipbuilding industry also develops ancillary industries.

The steps taken by the Ministry of Shipping to promote shipbuilding industry are given below:

(i) Financial Assistance Policy on Shipbuilding: To promote shipbuilding in Indian shipyards, the Union Cabinet has on December 9, 2015, approved New Shipbuilding Financial Assistance Policy for Indian shipyards for contracts signed during a ten year period, viz. 2016-2026, with budgetary projections of Rs. 4,000 crore for this period.

(ii) Right of Refusal to Indian Shipyards: The Union Cabinet has approved on 09.12.2015 that all government departments or agencies including CPSUs have to provide Right of First Refusal to Indian shipyards while procuring or repairing vessels meant for governmental or own use till 2025, after which only Indian shipyards would build and repair vessels for above-mentioned organisations. The modified guidelines have been uploaded on the website of the Ministry of Shipping in February 2019.

(iii) Grant of Infrastructure Status: The Department of Economic Affairs has notified the inclusion of standalone ‘Shipyards’ in the Harmonized Master List of Infrastructure Sub-sectors on 13th April 2016. With this inclusion, shipyards will be able to avail flexible structuring of long term project loans, long term funding from Infrastructure Funds at lower rates of interest and for a longer tenure equivalent to the economic life of their assets, relaxed ECB norms, and issuance of infrastructure bonds for meeting working capital requirements.