Draft Guidelines for Greenfield Clusters and Brownfield Shipyards

Eligibility

Proposed clusters that are capable of achieving an aggregate annual output of at least 1.2 million gross tonnage within 5 years from their establishment are eligible to apply. Entities proposing a greenfield shipbuilding cluster must be legally registered Indian companies, public sector enterprises, or special purpose vehicle (“SPV”) formed with MOPSW, state government or port authorities. The lead applicant must have a minimum 5-year experience in shipbuilding, ship repair, or related heavy engineering sectors. Government-funded infrastructure cannot be divested, leased, or repurposed for non-shipbuilding purposes for a minimum of 10 years post-completion without the approval of the National Shipbuilding Mission (“NSbM”).

Projects are government-led, typically structured through a SPV formed by state or central government agencies The SPV is to select a private or public sector shipyard partner through a transparent and competitive bidding process.

Financial Incentive

The scheme provides a grant-in-aid to the SPV for eligible common infrastructure costs like breakwaters, land reclamation, common maritime assets, etc. as specified in Schedule-I of the Greenfield Cluster Guidelines.

All funds released will be on a milestone basis and the quantum of the grant is to be determined on a case-by-case basis by the NSbM based on the project’s viability, economic impact and conformity to cluster objectives. Any balance project cost must be funded through a combination of equity and/or debt raised by the SPV partners including concerned state government, port authority, and other private/foreign shipyard developers.

Tenure

The shipyard partner will operate the facility under a long-term lease, typically 50 years, at a nominal or concessionary rent from the SPV.

Governing Agencies

The NSbM will serve as the nodal agency for implementation of this scheme and for the sanctioning of the capital assistance, with the Directorate General of Shipping acting as the designated implementation agency.

Dispute Resolution

For grievance redressal, matters are referred to an institutional mechanism to be notified by the MPOSW, which is mandated to resolve issues within 90 days of receipt.

Eligibility

Capital assistance is available to all Indian shipyard that are duly registered under the central or state act and have been operational for 3 years from registration date. The Brownfield Shipyard Guidelines also cover expansions within or adjacent to existing shipyards, as well as those at distant locations or through joint ventures, provided such facilities are registered under the same legal entity and name for at least one year prior to the application.

Financial Incentive

The scheme offers a direct grant of up to 25% of the ‘Fair Assessed Project Cost’ (“FAPC”) for items like cranes dry dock, slipway, etc. as specified in Schedule-I of the Brownfield Shipyard Guidelines. The FAPC is the lowest of three valuations: the cost estimated in the detailed project report, the cost appraised by an independent evaluation agency, or the actual certified capital expenditure. This structure caps the government’s exposure.

The grant is disbursed predictably in four milestone-linked tranches of 20%, 30%, 30% and 20% with each grant tranche secured by a bank guarantee of an equivalent amount, furnished by the shipyard. Like greenfield clusters, the quantum of capital assistance for a brownfield shipyard is also on a case-by-case basis considering the nature, scale, and scope of investments proposed by the shipyard for capacity expansion or modernization.

A shipyard that is part of a government-funded greenfield cluster is not eligible for availing benefits under the brownfield shipyard guidelines, preventing duplication of benefits.

Tenure

The shipyard must commit to operating the upgraded facility for a minimum of 10 years post-completion.

Governing Agencies

Same as for greenfield clusters.

Dispute Resolution

Same as for greenfield clusters.