FM announces Rs 25K crore maritime development fund
Kolkata: In a significant move to bolster the maritime industry, Union Finance Minister Nirmala Sitharaman, while presenting the Union Budget for 2025-26 on Saturday, proposed the establishment of a Maritime Development Fund (MDF) with a corpus of Rs 25,000 crore. This initiative aims to provide long-term financing and promote competition within the sector, fostering a comprehensive maritime ecosystem in India.
The MDF will play a crucial role in supporting indigenous shipbuilding and other blue-water infrastructure projects. It will provide financial assistance for the construction of ships, ports, trans-shipment hubs, terminals, ship-breaking and repair yards, marina development, dredging, and container manufacturing. By offering long-term and low-cost financial support, the fund seeks to address critical financing challenges and promote the sector’s growth. The government will contribute up to 49 per cent of the fund, with the remaining balance being mobilised from ports and private sector investments. This collaborative approach ensures a blend of public and private involvement, promoting innovation and efficiency in maritime operations.
The minister also underlined in her Budget speech that the MDF will offer multiple forms of financial support, including debt, equity, viability gap funding (VGF), and buyer credit. These measures aim to enhance the availability of cost-efficient capital, driving the development of the domestic shipbuilding industry. Financial assistance will also be extended to Indian shipyards to offset operational cost disadvantages, with incentives for the production of green ships using low carbon-emitting fuels or green hydrogen.
To further strengthen the industry, the government plans to facilitate the development of ‘Shipbuilding Clusters,’ which will include additional infrastructure facilities, skilling initiatives, and technology development, Sitharaman added. These clusters are designed to increase the range, categories, and capacity of ships produced in India, fostering a robust maritime ecosystem. Moreover, to support sustainable practices, the fund will introduce a ‘Shipbreaking Credit Note policy’, whereby 40 per cent of the scrap value of a vessel recycled at an Indian facility will be reimbursed through a credit note redeemable against the purchase of a new vessel in India.
