BL reported that Indian shipyards, which are facing the threat of becoming less competitive following the expiry of the 5 year government subsidy scheme about 2 months ago despite the boom in the global shipbuilding market, have asked the government to resume the subsidy scheme, as shipbuilding, unlike conventional manufacturing, is not protected by tariff barriers and they have to compete with global players for both domestic and export orders.

Mr V Kumar MD of Bharati Shipyard and secretary of the Shipbuilders Association of India said that “Initially, the government was not willing to even talk about it, but our subsequent meetings with senior officials in the finance and shipping ministries have drawn a positive response. They have understood the importance of the subsidy scheme.”

Sources said that the end of subsidies may not have an immediate impact on the balance sheets of the shipyards as the global market continues to be hot as also the prices of new ships.

Union government had introduced the 30% subsidy scheme for private sector shipyards in 2002, as the industry had no protection in the form of tariff barriers. Aided by the government support and the subsequent boom in the market, the turnover of the shipyards increased from INR 1,017 crore to INR 3,657 crore in the last 5 years.

With trends indicating that the boom may continue for another 5 to 7 years, shipbuilders have lined up investments of INR 18,500 crore. L&T and Pipavav shipyards head the list with planned investments of INR 3,000 crore each, followed by Good Earth Marine with INR 2,000 crore and ABG, Bharati and Adani Group with INR 1,500 crore each.