Mumbai Port Authority and Maharashtra government will form an equally owned special purpose vehicle (SPV) to set up a national mega shipbuilding cluster in the state as the Union government drafts major ports and state governments into a capacity expansion strategy that is key to making India one of the top five shipbuilding nations by 2047.

"We have communicated our intent to partner with the Maharashtra government and its designated agencies to set up the national mega shipbuilding cluster," M Angamuthu, Chairman, Mumbai Port Authority, told ET Infra.

The Maharashtra government has hired a consultant to write a Techno-Economic Feasibility Report (TEFR) for three locations - Nandgaon, Dighi and Vijaydurg - and prepare a Detailed Project Report (DPR) for one selected cluster within six months.

"The project is proposed to be developed under a landlord model, following which further action relating to funding, infrastructure development and investment facilitation would be initiated," Angamuthu stated.

The SPV will develop common infrastructure (both land and seaside) at the identified national mega shipbuilding cluster location in Maharashtra.

Mumbai Port Authority is working jointly with the state government and its designated agencies to evolve a suitable institutional framework, implementation model, and investment structure, including participation of private sector stakeholders, wherever feasible. As a first step towards this, Mumbai Port Authority has agreed to share half of the cost of preparing the TEFR," Angamuthu disclosed.

By 2037, India aims to increase its shipbuilding output 40-times to 4.5 million GT.

The Union government has budgeted ?19,989 crore for the Shipbuilding Development Scheme approved by the Union Cabinet. The scheme aims to develop 3-4 greenfield shipbuilding clusters, limited to one cluster per state.

100% capital assistance

The scheme will provide 100 per cent capital assistance in the form of a grant for eligible components such as breakwaters/tide independent basins/wave breakers, channel and basin development, land reclamation, area grading, regional shipbuilding capability development centres, common maritime assets (barges, floating cranes etc), internal infrastructure, utilities and land development.

"India has to build shipyards first that can take orders for constructing commercial ships. Government support and quick statutory approval processes are critical for setting up shipyards," said Ranjan Varghese, Chief Executive Officer at Hong Kong-based shipbuilding EPC company, Steel Ships.

"The role of state governments is crucial for the cluster development as state would provide land, necessary clearances and connectivity, extend fiscal incentives, tax rebates or policy facilitation through their own schemes to enhance project viability and attract investors," Vijay Kumar, Secretary, Ministry of Ports, Shipping and waterways told Chief Secretaries of states in a January 2 letter.

Given the limited number of clusters which are being planned for such funding, the proposals for setting up of greenfield shipbuilding clusters received from various states would be assessed on parameters such as SPV incorporation documents (between State and Central government entities), Techno-economic feasibility study report (TEFR) for setting up the cluster, status of land availability with parcel-wise details (land title, etc), enabling policies, incentives by the state government to facilitate investment in the greenfield shipbuilding cluster, status of investment commitment by shipyard(s) including by proposed anchor shipyard (MoU signed etc) and action plan with timelines and status of DPR preparation, investment commitment, land acquisition, if needed, connectivity, statutory clearances (EC, CRZ), Kumar noted.

"Preference would be accorded to proposals that demonstrate enhanced readiness based on the aforementioned criteria," Kumar said, while urging the chief secretaries to "initiate proactive action to formulate proposals to establish greenfield shipbuilding cluster in your state".

The land parcel earmarked for the proposed greenfield shipbuilding cluster has to be transferred to the SPV by the respective state governments at ?1, according to the guidelines for implementing the scheme. In cases where government land is not available, it may be acquired by the state government at its own cost.

An equal joint venture between the Union government-owned VO Chidambaram Port Authority and the State Industries Promotion Corporation of Tamil Nadu Limited (SIPCOT) has set up a special purpose vehicle named National Shipbuilding & Heavy Industries Park, Tamil Nadu (NSHIP, TN) to develop a national mega shipbuilding cluster in Thoothukudi, ET Infra reported on Thursday.

The Ministry of Ports, Shipping and Waterways has designated Deendayal Port Authority for the proposed greenfield shipbuilding cluster in Gujarat, Visakhapatnam Port Authority in Andhra Pradesh, Paradip Port Authority in Odisha, Syama Prasad Mookerjee Port Authority in West Bengal, New Mangalore Port Authority in Karnataka, Cochin Port Authority in Kerala, and Mormugao Port Authority in Goa.

A greenfield shipbuilding cluster is a location developed as plug-and-play infrastructure to host a comprehensive shipbuilding and repair ecosystem. Each shipbuilding cluster will comprise a waterfront of some 2 kms and landside area of about 2,000 acres, which includes 1,000 acres each for shipyards and ancillary industries, internal and social infrastructure and common facilities.

Ancillary industries include engine manufacturing, steel and component fabrication, suppliers of shipboard machinery, equipment, systems and other allied industrial units that support the shipbuilding and repair process and enhance the overall value chain.

The cluster will have one or more large shipyard(s) with a total cluster capacity of about 1.2 million gross tonnage (GT) per annum.

The SPV should secure investment commitments from one or more anchor shipyard(s) to set up shipbuilding facilities within the greenfield shipbuilding cluster. At least one of the anchor shipyard(s) should have a design capacity of minimum 0.5 million gross tonnage (GT) per annum, which has to be achieved within ten years from the date of commissioning of the shipyard.

The anchor shipyard(s) should submit a binding undertaking not to divest, transfer, lease or repurpose the anchor shipyard for any non-shipbuilding use for at least ten years from the date of project completion, except with prior written approval of the National Shipbuilding Mission.

Source: ET Infra. Com 

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