The proposal will give a big boost to the shipbuilding and ship repair industry and will facilitate the Make in India initiative of the Union Government.
To counter the cost-disadvantages, the government will grant a financial assistance of 20 percent of the contract price or the fair price, whichever is lower following the delivery of the ship.
The assistance will be reduced by 3 percent in every three years and will be given for all types of ships.
This policy will be in force for ten years. The implementation of this policy would require budgetary support of 4000 crore rupees over ten years.
The proposals also include grant of a Right of First Refusal for Indian shipyards for government purchases; tax incentives and grant of infrastructure status for shipbuilding and ship repair industry.
The shipbuilding industry has the same impact as infrastructure sector due to higher multiplier effect on investment and turnover and high employment potential due to multiplier effect.
The shipbuilding industry is strategically important industry due to role in energy security and maritime defense. It also plays a role in developing heavy engineering industry.