With the India government now ready to disburse INR 5,000 crore towards outstanding subsidy, the fledging Indian shipbuilding industry is upbeat once again. The industry, going through a down cycle is also looking forward to a fresh subsidy scheme from the next government to help it sail through choppy waters.

After 17 months of dispute between the shipping ministry and finance ministry, the latter on cleared last week the outstanding subsidy. It is to be given to companies for confirmed orders booked before August 14th 2007, when the scheme was finally closed by the government.

While public sector yards were to be given subsidy on installment basis, the private sector got it after the delivery of the ship.

In such a scenario, the domestic industry, which was booming a year ago, is struggling to survive. The INR 5,000 crore will provide a much-needed financial cushion.

Mr PC Kapoor MD of Bharati Shipyard said that "The company is eligible to receive subsidy of about 50% to 55% of its outstanding order book of INR 4,898.13 crore. The subsidy would help shipbuilding companies in planning for the future CAPEX requirement and expansion and also in easing liquidity and cash flows, especially in a downturn."

Mr S Hajara CMD of Shipping Corp of India said that "Before the close of the subsidy scheme in August 2007, several companies had booked orders hoping that the scheme would be extended. However, when it did not come, there was a lot of ambiguity in the industry." SCI, too, is planning a foray into shipbuilding from the end of this calendar.

Mr Dhananjay Datar CFO of ABG Shipyard said that "The private shipbuilding industry currently has an outstanding subsidy of about INR 250 crore. Therefore, the subsidy from the government will act as a big relief and a welcome move that the government is with the industry." The funds could also be used for future investments of these companies.

(Sourced from DNA)