Shipbuilding Financial Assistance Policy (SFAP) is the facility provided by Govt. of India to the Indian Shipyards to provide them a level playing field vis-à-vis Foreign Shipyards. This has been introduced as a special policy measure for revival and promotion of Shipbuilding Industry in India. Through this policy the Indian Shipbuilders will be given financial assistance on the new shipbuilding contracts with effect from April 1, 2016. This policy is being implemented through guidelines available at Shipbuilding Financial Assistance Guidelines

The list of organization recognized by the Government of India has been provided in the Gazette Notification No. S.O. 3316(E) dated December 26, 2014, as amended from time to time. The recognized organizations as on April 1, 2016 are:

1. Indian Register of Shipping
2. Lloyds Register
3. Bureau Veritas
4. American Bureau of Shipping
5. Nippon KaijiKyoka
6. Korean Register of Shipping
7. RINA Societa per zioni
8. Russian Maritime Register of Shipping
9. DNV GL

No, Vessels built for defence purposes or for use by Navy or Coast Guard are not included in this policy. However, vessels like tugs, tankers, cargo ships and passenger ships that are not fitted with any weaponry, contracted for construction by foreign defence entities are eligible. Please refer Schedule-I for the list of vessels excluded from financial assistance policy.

Please refer clause 2(g) of the Guidelines.

Please refer clause 2(b) and Schedule-V of the Guidelines.

Please refer Schedule-III of the Guidelines for the list of International Valuers.

The rate for computation of financial assistance will be the rate corresponding to the financial year in which the initial contract has been signed as provided in Schedule-IV of the Guidelines.

The guidelines provide flat 30% Financial Assistance for vessels where main propulsion is achieved by means of green fuels such as Methanol/Ammonia/Hydrogen fuel cells etc.

Please refer to clause 2(d) of the Guidelines for definition of Contract Price and clause 5 of the Guidelines for computation of Financial Assistance.

The shipyard applying for financial assistance under the policy for a vessel should not have availed any monetary support under any other policy or scheme of the Central or State Government for the said vessel.

There are three steps:

• Step1: Registration of shipyard.
• Step 2: In-principle approval of the shipyard for release of financial assistance subject to the fulfillment of requirements under the Guidelines. This creates a claim for such financial assistance subsequent to delivery of the vessel. Detailed in Annexure-I.
• Step 3: Release of financial assistance subsequent to delivery of the vessel. Detailed in Annexure-II.

A. Procedure for applying for in-principle approval is given below:

B. Procedure for applying for financial assistance is given below:

• Step1: Apply for in-principle approval under the policy within 45 days from date of signing of contract.
• Step2: Upload scanned copies of requisite documents.
• Step 3: Release of financial assistance subsequent to delivery of the vessel. Detailed in Annexure-II.
• Step1: Apply for financial assistance under the policy within 60 days of delivery of vessel(s).
• Step2: Submission of electronic copies of requisite documents corresponding to unique application number.

Director General of Shipping.

Director General of Shipping.

No. A portal has been developed: www.shipbuilding.nic.in. The applicant shipyard has to obtain a username and password for accessing the portal. Once the same is available, it can be used to make an application, submit/upload documents and track the application status. In case the documents are submitted without digital signatures, then the applicant will have to visit the office of competent authority for manual verification of submitted/uploaded documents with the original documents.

The claim for financial assistance for the vessel(s) shall continue to subsist as long as the vessel(s) contracted is eligible for financial assistance as per the Guidelines at the time of signing of its initial contract even if the contract has been terminated, provided that the vessel(s) was built and delivered within the stipulated timeline for delivery of vessel(s) as per the initial contract with the first buyer.

The exchange rate for computation of financial assistance will be the rate published by the State Bank of India under the category of TT Buying Rates on the date of contract. In case the exchange rate is not among the currencies published by the State Bank of India, the applicant shipyard shall obtain a certificate from the State Bank of India about the exchange rate for the currency prevailing on the date.

Yes. If any grievance arises from acts of commission or omission of the designated competent authority, the same shall be referred to the Institutional Mechanism. The Institutional Mechanism has been constituted vide Ministry of Shipping’s Order No. SY-16023/6/2015-SBR date June 16, 2016.

No.

Ministry of Ports, Shipping and Waterways shall review the Guidelines every 2 years from the date of issue or the date of last review of the Guidelines, as the case may be. However, this shall not affect the right of the Ministry to amend or modify these guidelines at any point of time including the Schedules and Annexures appended thereto.

In the case of shipbuilding contracts where more than two vessels are signed under the same contract, those vessels which are constructed and delivered within a period of four years from the date of Contract, shall be eligible for availing financial assistance. Only in case of Specialized Vessel(s), the delivery period may be extended beyond 3 years but not exceeding 6 years when the shipyard applies for such approval for the vessel(s) under this policy and upon receiving permission by the competent authority.

Financial assistance is provided after processing the application for financial assistance (Refer Annexure II) upon successful delivery of the vessel.

Shipyard will not be entitled to avail financial assistance.

No. However, in cases where clarifications are sought, the applicant shipyard shall make good the deficiency and/or provide clarification within thirty (30) days of receipt of such communication from the competent authority.

Details of five valuers will be randomly selected by the portal for assessment of value of the vessels out of which shipyard can select any three for submission of valuation report.

The applicant shipyard will be responsible to make the payment to the International Valuers.

The applicant shipyard will upload the valuation report within forty-five (45) days from the date on which details of previous set of valuers are generated by the portal.

In such a situation the shipyard will have to apply for fresh names of International Valuer(s) within forty-five (45) days from the date on which details of previous set of valuers are generated by the portal.

If the buyer has waived the liquidated damages and shipyard submits the certificate of practising Chartered Accountant confirming the same, then amount of financial assistance would not be reduced on account of liquidated damages. The format for the certificate of Chartered Account, to be submitted by shipyard, is given at Annexure-III of the guidelines. Further, if liquidated damages are imposed, then the same amount of liquidated damages as certified by the Chartered Accountant would be considered for computation of financial assistance (Refer Q39 for details). The delivery time may be 3 years, 4 years or 6 years as the case may be. In any case (with or without liquidated damages), the vessel(s) should be delivered within 3 years, 4 years or 6 years as the case may be.

Yes. As per the definition of contract in clause 2(c) of the guidelines, the novated contract shall remain valid provided that the contract continues to pertain to the said underlying vessel or vessels of the initial contract.

Yes, a certificate of actual payment received for a vessel duly certified by a Chartered Accountant registered with the Institute of Chartered Accountants of India is to be provided at the time of claim of financial assistance. Format for the certificate of Chartered Accountant has been provided at Annexure-III of the Guidelines.

If the application is rejected as per the provisions of the Guidelines, then the shipyard may appeal to the Institutional Mechanism.

No, it will not be considered as part of the 'Actual Payment'. “Actual Payment” means the total quantum of payment received by the shipyard pertaining to a shipbuilding contract, including such payment received subsequent to the delivery of the vessel, as is duly certified by a Chartered Accountant registered with the Institute of Chartered Accountants of India in the format prescribed at Annexure-III of the guidelines and supported by requisite documentary evidence.

If the budget is not available in a particular year, then the financial assistance will be released on priority to the qualified/approved applicant shipyard in the subsequent year.

An illustration of treating LD is as under:

Liquidity Damage as certified by Chartered Accountant on letter head - Rs. 25 Therefore, as per proviso to clause 2(d) of the Guidelines, Contract Price= value of the vessel in the initial/first contract= Rs. 75 Financial Assistance = 20% x Lowest (Contract price, fair price) = 20% of Rs. 75 = Rs. 15 .

• Value of the vessel in the initial/first contract - Rs.100
• Date of contract - June 1, 2016-10-28
• Date of in-principal approval - August 1 , 2016
• Date of delivery of vessel - May 30, 2019
• Actual payment received by shipyard - Rs. 300