The Indian government has finalized and announced a 7 trillion Korean won support policy to foster the shipbuilding and shipping industries. Following the announcement of the basic direction for the shipbuilding industry promotion policy in September, aiming to become one of the *2030 World Top 10 Shipbuilding Powers*, the government has now presented specific guidelines. The core of the policy is that the government will provide substantial subsidies if ships are built or shipyards are constructed in India. It is expected that South Korean shipbuilding companies, including HD Hyundai, which has been selected as India’s shipbuilding partner, will benefit.

According to the shipbuilding industry on the 29th, the key points of the 7 trillion Korean won (approximately 430 billion rupees) support guidelines finalized by the Indian government are twofold: financial support covering shipbuilding costs and development support to assist in constructing or expanding shipyards.

The most notable aspect is the generous cash subsidies. The Indian government has decided to support 15–25% of the construction costs, depending on the type of ship, if ships are built in domestic shipyards. The support period extends until March 2036. VLCC, a supertanker for crude oil transport, and Suezmax-class large vessels have also been included in the subsidy targets. India, the world’s third-largest oil importer, plans to order 267 ships, including crude oil carriers, by 2047 to foster the shipping industry, and these ships could also be eligible for subsidies.

Originally, ship orders eligible for subsidies were to be subject to competitive bidding among multiple shipyards, but direct contracts with specific shipyards (designated contracts) have also been permitted. Support for shipyard construction will also be expanded. Regulations that previously prevented overlapping receipt of support funds from the central and state governments have been lifted. With the announcement of this policy, HD Hyundai, which is the fastest among global shipbuilders to push for establishing a new shipyard in Tamil Nadu State, southern India, is expected to gain momentum in its business.

India’s share in the global shipbuilding market is only 0.06%. For South Korean companies, the biggest risks were initial investment costs and securing order volumes. Analysts say the Indian government’s generous support measures will be a significant help. A source from the industry stated, “India has secured demand for domestically ordered ships and has low labor costs, so South Korean shipyards could compete with China through cooperation with India.”
Source: The Chosun Daily