Financial Help for Green Fuel Ships in India
By Union Minister Sarbananda Sonowal
Union Minister of Ports, Shipping and Waterways, Sarbananda Sonowal, announced that the Indian government is providing financial assistance for ships using green fuels like Methanol, Ammonia, or Hydrogen fuel cells. This assistance covers 30% of the costs for such vessels.
Additionally, under the Shipbuilding Financial Assistance Policy (SBFAP), the government offers 20% financial aid for vessels with electric or hybrid propulsion systems. The Ministry has updated the SBFAP guidelines to support indigenous shipbuilding with modern technologies and machinery. This includes higher financial assistance for specialized vessels like wind farm installation vessels and sophisticated dredgers.
Minister Sonowal emphasized the government’s efforts to promote indigenous shipbuilding. He advised entities involved in shipbuilding and ship-owning to follow the Government of India Public Procurement (Preference to Make in India) Order, 2017. According to this order, ships costing less than Rs 200 crore must be procured from Indian shipyards.
The Ministry of Ports, Shipping, and Waterways has granted infrastructure status to shipyards, enabling them to access cheaper long-term capital and invest in capacity expansion. This move aims to boost the Indian shipbuilding industry.
In November 2021, the government released Standard Tug Designs for Major Ports to procure tugs built in Indian shipyards. Guidelines issued in May 2016 outline the evaluation and awarding of tenders for new shipbuilding orders by government departments or agencies. These guidelines give qualified Indian shipyards the ‘Right of First Refusal,’ allowing them to match the lowest price offered by foreign shipyards.
To further promote indigenous shipbuilding, the Ministry revised the hierarchy of the Right of First Refusal (RoFR) on September 20, 2023. The revised hierarchy is:
- Indian-built, Indian-flagged, and Indian-owned
- Indian-built, Indian-flagged, and Indian IFSCA-owned
- Foreign-built, Indian-flagged, and Indian-owned
- Foreign-built, Indian-flagged, and Indian IFSCA-owned
- Indian-built, foreign-flagged, and foreign-owned
The SBFAP scheme provides Indian shipyards with a level playing field against foreign shipyards for domestic and international shipbuilding orders. This scheme, aimed at reviving and promoting the Indian shipbuilding industry, covers contracts signed from 2016 to 2026.
Both public and private shipyards, such as Cochin Shipyard Ltd, Chowgule Shipyard, Mazagon Dock Shipbuilders, and Garden Reach Shipbuilders and Engineers, have secured several domestic and foreign orders, leveraging the financial assistance available through SBFAP.
Minister Sonowal also added that since the inception of the SBFAP scheme, 39 shipyards have procured a total of 313 vessel orders, including domestic and export orders, valued at approximately Rs 10,500 crore. These shipyards have received financial assistance totaling Rs 337 crore for delivering 135 vessels to domestic and international shipowners.
Doubts Revealed
Sarbananda Sonowal -: Sarbananda Sonowal is a politician in India. He is the Union Minister for Ports, Shipping, and Waterways.
Green Fuel -: Green fuel is a type of energy that is good for the environment. It includes fuels like Methanol, Ammonia, and Hydrogen that do not pollute the air as much as regular fuels.
Methanol -: Methanol is a type of alcohol that can be used as fuel. It is cleaner than regular petrol or diesel.
Ammonia -: Ammonia is a chemical that can be used as fuel. It does not produce carbon dioxide when burned, which is better for the environment.
Hydrogen fuel cells -: Hydrogen fuel cells use hydrogen gas to produce electricity. They are very clean because they only produce water as a byproduct.
Shipbuilding Financial Assistance Policy (SBFAP) -: The Shipbuilding Financial Assistance Policy (SBFAP) is a government plan to help companies build ships. It provides money to make building ships cheaper.
Electric or hybrid vessels -: Electric or hybrid vessels are ships that use electricity or a mix of electricity and regular fuel to move. They are better for the environment.
Indigenous shipbuilding -: Indigenous shipbuilding means building ships within India using local resources and workers. It helps the country’s economy.
Rs 10,500 crore -: Rs 10,500 crore is a large amount of money in Indian currency. It is equal to 105 billion rupees.
Rs 337 crore -: Rs 337 crore is another large amount of money in Indian currency. It is equal to 3.37 billion rupees.
