Subsidy support to Indian shipping companies in global tenders

Jul 14: In order to achieve the objective of Atmanirbhar Bharat, the Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved a scheme to provide Rs.1624 crore over five years as subsidy to Indian Shipping companies in global tenders floated by Ministries and CPSEs for import of  government cargo in the following manner: 

  1. For a ship which is flagged in India after 1st February, 2021 and is less than 10 years at the time of flagging in India, the subsidy support would be extended @15% of the quote offered by the L1 foreign shipping company OR the actual difference between the quote offered by the Indian flag vessel exercising ROFR and the quote offered by the L1 foreign shipping company, whichever is less. For a ship which is flagged in India after 1st February, 2021 and which is between 10 to 20 years old at the time of flagging in India, the subsidy support would be extended @10% of the quote offered by the L1 foreign shipping company OR the actual difference between the quote offered by the Indian flag vessel exercising ROFR and the quote offered by the L1 foreign shipping company, whichever is less.

The rate at which the above subsidy support is extended would be reduced by 1% every year, till it falls to 10% and 5%, respectively, for the two categories of ships mentioned above.

  1. For existing Indian flagged ship which is already flagged and less than 10 years old on 1st February 2021, the subsidy support would be extended @10% of the quote offered by the L1 foreign shipping company OR the actual difference between the quote offered by the Indian flag vessel exercising ROFR and the quote offered by the L1 foreign shipping company, whichever is less. For existing Indian flagged ship which already flagged and between 10 to 20 years old on 1st February 2021, the subsidy support would be extended @5% of the quote offered by the L1 foreign shipping company OR the actual difference between the quote offered by the Indian flag vessel exercising ROFR and the quote offered by the L1 foreign shipping company, whichever is less.
  2. The provisions of this subsidy support would not be available in case where an Indian flagged vessel is the L1 bidder.
  3. The     budgetary     support    would     be     provided     directly     to     the Ministry/Department concerned.
  4. The subsidy support would be extended only to those ships which have bagged the award after the implementation of the scheme.
  5. Flexibility in allocation of funds for expenditure from one year to another and within the various Ministries/departments of the scheme.
  6. Ships older than 20 years would not eligible for any subsidy under the

Scheme.

  1. In view of the enlarged scope of the Scheme this Ministry shall seek
  2. allocation of such additional funds from the Department of Expenditure asmay be required,
  3. The scheme would be reviewed after 5 years.

Details:

a) In order to address the cost disadvantage suffered by Indian flag ships, the Hon. Finance Minister Smt. Nirmala Sitharaman, has in her Union Budget Financial Year 2021-22 speech on 1st February 2021, announced a scheme providing an amount of Rs.1,624 crore over five years to promote flagging of merchant ships in India by providing subsidy support to Indian shipping companies in global tenders floated by Ministries and CPSEs.

b) The maximum amount of subsidy outgo for five years would be in the range of an estimated Rs. 1624 crore.

c)  Registration shall be done online within 72 hours like the world’s best ships registries. This will make it easy and attractive to register ships in India and thereby aid in boosting the Indian tonnage.

d)  In addition to this, it is intended to provide 30 days to any in-flagging vessel to replace the crew on board with Indian crew.

e) Similarly,   steps   are   also   being   taken   to   rationalize   the   manning requirements on the ships by aligning them with international standards.

f)  The Scheme has laid out a monitoring framework which is detailed at also provides for effective monitoring and review of the Scheme. For this, a 2-layer of monitoring system is envisaged as mentioned below:-(i) Apex Review Committee (ARC) (ii) Scheme Review Committee (SRC).

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