Govt to extend shipbuilding subsidy scheme

new delhi: the government is planning to extend the shipbuilding subsidy scheme for another five-year period in an effort to revive public-sector shipyards. the scheme introduced in 1997 is set to expire on august 14 this year and the shipping ministry has taken the view that the subsidy scheme needs to be allowed for another five years. the existing scheme envisages the payment of 30 per cent subsidy for construction of ocean-going vessels on the total cost of the ship, and the subsidy is available for domestic as well as export orders. this essentially means that if a yard contracts to build a vessel for $100 m for either a domestic or overseas buyer, the government will step in and give an additional amount of $30 m to the yard. the proposal is expected to be taken to the cabinet for approval sometime next month. a cabinet note seeking comments of other ministries has already been circulated. the subsidy scheme was introduced initially for two years in 1990 and then discontinued in 1992. the government reintroduced the scheme in 1997 to enable public-sector shipyards to compete with private shipyards, which enjoyed several advantages in the form of tax-breaks, as well as with shipyards overseas. the scheme, however, has not had many takers as these shipyards have not obtained a large number of orders. the 1997 scheme was slightly modified in august ‘00 to make it more attractive for yards to bid more aggressively. according to government sources, outflows under the scheme were just about rs 20 crore last year. the revised subsidy scheme said the price of the ocean-going vessel to be built at indian public shipyard may be fixed on the basis that the public sector would participate in an open tender and be allowed to match the lowest bid. it further said that in cases where the buyer decides to place an order on the basis of a negotiated price the shipyard could make an application to the shipping ministry for the subsidy.