NEW DELHI: The Shipping Ministry has allowed a one year relaxation to ship builders that are getting financial assistance from the centre. In an office order, the Director General Shipping (DGS) has been allowed to provide a relaxation of up to one year for construction, and delivery of vessels for contracts signed during March 24, 2021 and March 31, 2022.

This is being done in view of the spread of COVID variants that has affected the global supply chain system.

The Centre has approved financial assistance for 47 vessels amounting to Rs 155 crore under the Shipbuilding Financial Assistance Policy (SBFA). The total contract value of these ships stands at Rs 850 crore.

The Shipping Ministry had said that 95 applications have been received till now seeking an in-principle approval for 170 vessels with contract value of Rs 2,620 crore.

The guidelines of the policy have been in force from April 1, 2016 and shall be applicable for shipbuilding contracts signed between April 1, 2016 and March 31, 2026.

Under the SBFA policy, 21 shipyards having various capacities have registered under the scheme. Prominent companies registered under the scheme include L&T Shipbuilding Ltd, Cochin Shipyard Ltd, Titagarh Wagons Ltd and Goa Shipyard Ltd.

“Financial assistance is being granted to Indian shipyards equal to 20 per cent of the lower of contract price or the fair price or actual payments received of each vessel built by them for a period of at least 10 years commencing 2016-17. This rate of 20 per cent will be reduced by 3 per cent every three years,” said a Shipping Ministry statement.

Under the policy, only those vessels, which are constructed and delivered within three years from the date of contract, shall be eligible for availing financial assistance. In case of specialised vessels, the Centre can grant an in-principle approval for construction and delivery of such vessels for up to six years.