NEW DELHI — India plans to offer cash subsidies, lower taxes and other incentives to bolster its shipbuilding industry, two government sources said – part of an effort to reduce the pain of high freight rates for the nation’s manufacturers.
The plans include subsidies so that at least 50 new vessels can be built as well as the granting of “infrastructure status” to the industry which would help with financing from banks, said the government officials.
A 10 billion rupee ($123 million) maritime development fund is also likely to be established, they added, without providing further details.
Finance Minister Nirmala Sitharaman is expected to announce the plans when she presents the annual budget for 2023/24 to parliament on Feb. 1, a senior government official with the direct knowledge of discussions told Reuters.
Details are, however, subject to change as budget consultations are still going on, the official added.
The sources were not authorized to speak to media and declined to be identified. A finance ministry spokesman declined to comment.
The Federation of Indian Export Organisations (FIEO) and the shipbuilding industry have sought the concessions.
India’s exporters and importers paid nearly $100 billion in freight last year, almost double the amount three years ago, said FIEO director general Ajai Sahai, adding that both exports and imports had surged and freight rates had risen significantly.
India has around 35 shipbuilding companies, including some state-owned firms. Its maritime freight industry consists of about 1,500 vessels with a gross tonnage capacity of around 13 million tonnes.
($1 = 81.4225 Indian rupees) (Reporting by Manoj Kumar; Editing by Edwina Gibbs)