Indian shipyards have proposed a series of changes to the recently announced ₹20,416-crore Shipbuilding Financial Assistance Scheme (SBFAS), urging the government to ease domestic content requirements and fine-tune implementation guidelines to help the industry better realise the scheme’s objectives.
In a representation to the Ministry of Ports, Shipping and Waterways, the Shipyards Association of India (SAI) said the domestic equipment ecosystem has not yet matured enough to support the mandated localisation thresholds, particularly for high-value and critical systems such as propulsion, navigation, automation, specialised cranes and motion-compensated gangways.
SAI has suggested that the domestic content requirement for disbursement of financial assistance be deferred for three years for domestic orders and five years for export orders. During this period, shipyards should be allowed to use nil domestic content, with localisation norms to be introduced gradually as the ecosystem develops.
Under the SBFAS guidelines, shipyards are ineligible for financial assistance if domestic content is below 30 per cent. Assistance is disbursed on a pro-rata basis for domestic content between 30 and 40 per cent, while full aid is available for projects achieving 40 per cent or more domestic content.
“Indigenisation in defence shipbuilding began nearly four decades ago with sustained policy support, whereas localisation of commercial shipbuilding equipment will take time,” SAI chief executive officer Sanjiv Walia said in a January 13 letter to the ministry, urging authorities to re-examine the parity drawn between commercial and naval shipbuilding equipment requirements.
The association has also recommended making the involvement of local ship design houses mandatory—initially for domestic orders and subsequently for export vessels—to strengthen indigenous design capabilities through a phased approach.
SAI further proposed that Floating Dry Docks (FDDs) exceeding 135 metres in length and 35 metres in width be categorised as specialised vessels under the scheme, citing their technical complexity, precision ballast systems and the significant infrastructure investment required for construction.
Concerns have also been raised over transition timelines between the existing Shipbuilding Financial Assistance Policy, which expires on March 31 after a decade, and the revised scheme. While shipyards can opt for the older policy for contracts signed before March 31, the guidelines require ‘Approval-in-Principle’ to be granted before that date—failing which projects automatically fall under the new scheme.
Given the prescribed timelines for contract registration and Fair Price Evaluation, SAI warned that the provisions create uncertainty for shipyards negotiating contracts, especially for electric, hybrid and green vessels that attract higher incentives under the existing policy. The association has sought an additional 45 days—up to May 15, 2026—for obtaining approvals under the current framework.
Shipyards have also called for higher financial assistance for specialised vessels such as electric, hybrid, green and solar vessels with contract values below ₹100 crore, arguing that enhanced support is essential to advance maritime decarbonisation.
Other recommendations include allowing revised contract prices—where changes arise from justified amendments in scope of work—to be considered for financial assistance eligibility, and expanding the scope of the proposed 25 per cent capital grant for brownfield shipyard expansion to include breakwaters, capital dredging, workshops, training centres, worker accommodation and logistics infrastructure.
The association said these measures would provide sustained support to the domestic shipbuilding industry while progressively increasing indigenous content in line with national policy goals.
