The government is evaluating a series of incentives to bolster the domestic shipping sector, including support for ship manufacturing and tax breaks for industry operations. The Ministry of Ports, Shipping, and Waterways (MoPSW) is collaborating with the Finance Ministry to finalise these measures, officials said.

A senior government official stated that the initiatives aim to address demands from the domestic shipping industry to enhance global competitiveness. The focus will be on promoting local manufacturing of larger, high-end ships designed for intercontinental trade.

Proposals under consideration include reducing or removing withholding tax on income earned by foreign-based original equipment manufacturers (OEMs) in the shipbuilding sector. Additionally, exemptions from Tax Deducted at Source (TDS) on the income of Indian seafarers aboard domestic-flagged ships have been suggested to align them with their counterparts on foreign-flagged ships.

The ministry has also proposed an exemption from basic customs duty (BCD) on capital goods and components used in shipbuilding. Discussions are ongoing, with the Finance Ministry expected to weigh revenue implications before making a decision in the upcoming budget on February 1.

The government is in talks with global shipbuilding companies to establish local manufacturing facilities in India. Planned support measures for 2025 include financing shipbuilding and recycling projects. India has already outlined plans for three large shipbuilding and repair clusters, with the current shipbuilding financial assistance program set to be extended beyond its 2026 deadline.

A Rs 300 billion Maritime Development Fund is also in the pipeline, complemented by a credit note scheme to incentivise ship owners to scrap older vessels and construct replacements domestically. These efforts aim to position India as a global leader in the shipping and maritime industry.

(ET)