Maritime Development Fund likely by year-end

Setting up a dedicated maritime vertical and having a standalone company with equity participation from multiple agencies are among plans

India’s proposed Maritime Development Fund – that looks at providing long term, low cost financial support and push towards indigenous shipbuilding – is likely to be ready by the end of this year, multiple officials of the Ministry of Ports, Shipping and Waterways (MoPSW) told flagging, ownership financing, leasing, among others. If not the entire, we want to have up to 5 per cent of world’s tonnage soon. That is what the Maritime Development Fund will work towards,” TK Ramachandran, Secretary, Ministry of Ports, Shipping and Waterways (MoPSW) told businessline, on the sidelines of an event orgainsed by FICCI here in the city.

Another official, requesting anonymity said, the Maritime Development Fund would also promote cruise tourism and other activities like mechanization and capacity expansion of existing ports through PPP, etc.

FUNDING MECHANISMS

Documents show, that the Maritime Development Fund is proposed to start with a corpus of ₹25,000 crore spread over a sevenyearperiod.

“Multiple funding mechanisms— Debt, Equity, VGF and buyer credit support will be part of the fund mandate,” the official explained.

The official maintained that, internal review of the Ministry has shown that Indian shipping companies struggle to grow tonnage “due to difficulties in accessing required finance”, as there is a mismatch in tenure of loan offered versus life of vessel.

OTHER PROVISIONS

“Lack of infrastructure status limit potential avenues for longterm lowcost funds for shipping making it less attractive sector. And we are working with the Finance Ministry for that. We have proposed to provide ‘infrastructure’ status to enable vessel operators shipping companies to raise long termlow cost finance,” the official said.

“We have compared working of similar funds in Norway, Korea and Japan. Found out what more we can add, so as to benchmark and better the provisions making it more attractive to invest here,” the official said.

Factors like buyer default cover or vendor default cover are being included in the Indian version.

TAX INCENTIVES

The official added that tax incentives are being provided for ship leasing that include concessional rate of 0 per cent and 8.25 per cent for ship leasing activities.

“It is proposed to evaluate similar tax benefits to be extended to domestic ship lessors and ship management companies. Detailed proposal to be developed in consultation with Ministry of Finance,” the official said.