Government to set up Rs 1,500 crore fund for shipbuilding

MUMBAI: Government is in "advanced stages" to have a dedicated fund for shipbuilding industry to be handled by Exim Bank which will help the ailing sector with at least Rs 15,000 crore of funds, a top official said.

"We are planning to open a dedicated shipping fund within Exim Bank. It is a proposal at an advanced stage," Exim Bank chairman and managing director Yaduvendra Mathur told reporters.

The fund will be for financing the construction, and refitting and repair of ships, Mathur said on the sidelines of the Asian Exim Banks Forum in Jodhpur.

He said the government has decided to set aside Rs 1,500 crore for the purpose, which will serve as the equity and when combined with Exim Bank's capability to leverage ten times, can result in the availability of Rs 15,000 crore in fresh liquidity to the sector.

Initially, there was talk of creating a corporation to handle this but given past experience of an unsatisfactory outcome after formation of such a body, the government may come to Exim Bank, Mathur said.

"The National Manufacturing Council is strongly supporting creation of this fund within Exim Bank," Mathur said, adding that the PMO is also supporting the Exim Bank.

Additionally, the government can also take advantage of Exim Bank's capabilities like raising funds through bond issues abroad, he said.

Mathur cited South Korea with regard to ship building and added that the sector has a tremendous potential to emerge as a strong foreign currency earner for the country.

At present, private sector companies like Bharti Shipyard and ABG Shipyard, engaged in the sector along with the state-run ones. Many of these companies are undergoing financial stress due to tepid conditions in the industry which experts say are cyclical in nature.

Recently the government had announced that it will be acquiring three LNG carriers locally, as part of a programme to acquire 11 such ships. It can be noted that the Government has been aggressively pushing the 'Make in India' programme to support local growth.

Meanwhile, Mathur said Exim Bank is thinking of increasing its presence in Delhi and may be shifting some officials from the Line of Credit department to the national capital, as their work involves close coordination with Union Ministries.