Developing India’s Blue Economy: Government Promotes Ship Building for Inland Waterway Transportation
India’s Union Shipping Ministry is taking steps to promote self-reliance and foster the growth of the country’s blue economy. One of the key initiatives is to increase the construction of inland vessels and ships, thereby reducing India’s dependence on foreign imports.
In order to encourage local firms to build these vessels, the Ministry is reportedly working on a package worth Rs 5,000 crore, which will provide Viability Gap Funding (VGF) to interested companies. This capital grant from the government targets large infrastructure projects that involve public-private partnerships, and plays a crucial role in making such projects commercially viable, thus encouraging private investment.
The plan, which is currently under discussion and formulation, will focus on developing an ecosystem to build inland vessels that support cargo movement on national waterways. The objective of the programme is to facilitate the production of inland vessels for the transportation of passengers and goods throughout India’s progressively expanding inland waterways network. This network has grown from only three in FY15 to 22 in FY23, and is projected to expand further.
According to a report in Mint, the government may also consider VGF for entities that manufacture sea-bound vessels, including cruise ships. The scheme aims to encourage the development of coastal shipping, which has become increasingly important due to the significant increase in annual cargo movement on waterways in India. In FY15, the total cargo movement on waterways was 30 million tonnes (MT). This has increased to over 116 MT in FY23, and is expected to rise further to over 200 MT by 2030.
To cater to this demand, the Ministry plans to incentivize vessel manufacturing and provide more financial support for the construction of technologically advanced green ships under the Ship Building Financial Assistance (SBFA) policy. This policy aims to make India an attractive destination for advanced vessel production and is not limited to the development of ports alone. It also encompasses shipbuilding, ship repair, and accessory facilities across the country.
India’s Shipping Ministry is taking concrete steps to boost the construction of inland vessels and ships, and incentivize local firms to build these vessels. With a growing inland waterways network and increasing cargo movement, this initiative will not only promote self-reliance but also foster the growth of the country’s blue economy. By providing Viability Gap Funding and financial assistance under the SBFA policy, the Ministry aims to make India an attractive destination for advanced vessel production and reduce the country’s dependence on foreign imports.