Tamil Nadu eyes global shipyards with equity, leasing push under Shipbuilding Policy

From equity participation to asset leasing and production-linked incentives, the Government of Tamil Nadu on Wednesday unveiled sweeping incentives to woo shipbuilding majors under its Shipbuilding Policy 2026 released on Wednesday. The policy aims to position Tamil Nadu as a preferred destination for leading shipyards and draw investments into high-value, large ocean-going vessels, including Very Large Crude Carriers (VLCCs). “Shipyards” under the policy include firms engaged in manufacturing, repair and maintenance of ships in the State. Units committing a minimum investment of ₹1,000 crore and creating at least 1,000 jobs will qualify for a Structured Package of Assistance. The policy also envisages the development of shipbuilding clusters integrating design, fabrication, repair, research and development, and training. Eligible shipyards may choose from four incentive mechanisms: equity participation by the State, an asset leasing model, capital subsidy on eligible fixed assets, or production-linked incentives. Under the equity participation route, the State government or a designated agency may take up to 49% stake in the proposed facility. If extended in cash, the support will initially be structured as debt released in tranches linked to milestones and subsequently converted into equity upon their achievement, according to the policy. A key feature is a structured asset leasing framework. The State, through an identified entity, may buy and lease back critical shipyard assets(excluding land) valued at up to ₹6,000 crore or 20% of the total project cost, whichever is lower. The State’s annual outflow under this mechanism will be capped at ₹1,000 crore across projects. The policy also provides capital subsidy option ranging from 10%-25% for projects with investments between ₹1,000 crore and ₹12,000 crore and above. Shipyards will be eligible for an interest subvention of 2% on project loans, capped at ₹10 crore per annum for 15 years. To facilitate implementation, a Special Purpose Vehicle (SPV) will be created under the State Industries Promotion Corporation of Tamil Nadu (SIPCOT), with a separate legal existence. An agency nominated by the Government of India may be invited as a major stakeholder. The SPV will support the development of shipbuilding clusters, enabling seaside infrastructure backed by the Centre and land-side facilities through SIPCOT, while also assisting in project financing. The State’s move aligns with the Centre’s broader push to revitalise the sector, including a ₹69,725 crore support package comprising a ₹25,000 crore Maritime Development Fund and a ₹24,736 crore Shipbuilding Financial Assistance Scheme.