Rediff.com » Business
Shipbuilding: Reinstate modified subsidy
February 24, 2015 21:08 IST
Indian shipbuilding industry is a minor player with an early single digit market share in the global shipbuilding market. Given the fact of excess capacity in the global ship building market and competitive disadvantage of the domestic shipbuilding industry in commercial shipbuilding sector, the domestic shipbuilding industry increasingly rely on domestic defence orders to sustains itself in troubled times. The new NDA government which promised a new comprehensive policy to promote ship building industry is yet to unveil it.
Industry expectation
- Provide infrastructure status as shipbuilding like any other infrastructure projects has long deliveries and is a capital intensive industry.
- Reinstate modified shipbuilding subsidy. Moreover the industry wants the shipbuilding subsidy scope should be expanded to cover all categories of assets built by shipyards whether owned in India or for exports.
- Require incentives for local build and owned vessels. Preference should be given to Indian built assets in oil and gas, shipping sector with weightage for new assets over old ones.
- Cheaper long term finance for setting up of shipyards so as the industry players will be incentivized to foray into offshore construction areas, which will be boost for oil E&P of the country.
- Input services received or consumed in or in relation to the activity of ship building should be exempted from levy of service tax which will make the ship building cost competitive viz a viz international players and boost exports.
- Input services received / consumed in or in relation to the activity of “Ship repairs/ refurbishment” should also be considered for exemption from the levy of the service tax, which will make the ship repair /refurbishment cost competitive viz international players and will boost export of services.
Stock to watch
Pipavav Defence, ABG Shipyard, Bharati Shipyard
Analyst expectation
Unlikely to see shipbuilding subsidy reinstated
Summary
‘Make in India’ being the slogan of the new NDA government the industry is expected to get significant pie in domestic defense purchases. Moreover the “Expression of Interest” (EOI) called by ONGC for chartering of LNG carriers made it clear the intensions of boosting domestic manufacturing with specific number of ships to be of India built. Overall the budget 2015-16 is expected to be neutral for the sector.
Budget 2015: Complete Coverage
Recommended by Rediff.com
Don't squeeze throats of farmers: Sena opposes land ordinance
© 2024 Rediff.com