Subsidy reduction from 20% to 15% for electric boats poses a risk to India’s green inland waterway logistics goals.
Revised guidelines for the Shipbuilding Financial Assistance Scheme, introduced by the government, have sparked concerns across the maritime sector. The new framework reduces state aid for constructing electric, solar, and hybrid vessels from a previous flat rate of 20 per cent to 15 per cent, a move industry experts suggest could stall the adoption of sustainable shipping technologies.
The Shipyards Association of India has highlighted that while the scheme correctly identifies green vessels as “specialised,” the current financial structure provides no actual premium for smaller projects. Under the guidelines, specialised vessels valued under 100 crore receive only a 15 per cent subsidy—the same rate applied to standard diesel-powered ships.
Sanjiv Walia, the Chief Executive of the Shipyards Association of India, noted in a statement on 04 January 2026 that this lack of additional incentive effectively removes the commercial advantage of choosing eco-friendly propulsion. This is particularly critical for India’s inland waterways, where approximately 90 per cent of operations rely on smaller vessels that fall within this price bracket.
Further criticism has come from innovators in the eco-marine sector. Sandith Thandasherry, the founder of Navalt Solar & Electric Boats, described the change as a significant setback. He observed that the previous 2023 amendment had finally allowed electric boats to compete with cheaper diesel imports. The current 5 per cent reduction represents a loss of between 1 crore and 4 crore per vessel, which may force fleet owners to revert to conventional fuels to maintain financial viability.
Although the government has committed to International Maritime Organisation net-zero targets and the Maritime Amrit Kaal Vision 2047, the domestic shipbuilding industry argues that the new rules contradict these goals. Small and medium-sized shipyards in regions such as Kerala, Goa, and Gujarat, which specialise in tugs and ferries, are expected to be the most affected by the reduced support.
The Ministry of Ports, Shipping and Waterways has maintained that the overarching Shipbuilding Financial Assistance Scheme, which carries a budget of 20,416 crore and is valid until 31 March 2036, is designed to bolster global competitiveness. However, stakeholders are calling for an urgent review of the subsidy slabs to ensure that the transition to green energy remains a priority in the nation’s logistics and shipping sectors.
SOURCE – ET INFRA
