29-Dec-2025
To
The Prime Minister’s Office
South Block, Raisina Hill
New Delhi – 110011
Subject: Urgent policy correction needed to align maritime financing with India’s decarbonisation goals
Respected Sir,
I write to bring a critical policy concern to your attention regarding recent changes in the Shipbuilding Financial Assistance Scheme (SBFAS) 2025 that are adversely affecting India’s nascent electric boat and green maritime innovation ecosystem.
India’s Maritime Amrit Kaal Vision 2047 has rightly set ambitious goals for transforming coastal shipping, inland waterways, and domestic shipbuilding capacity — including leadership in strategic decarbonisation, indigenous innovation, and global competitiveness. The comprehensive maritime package approved by the Union Cabinet extends the Shipbuilding Financial Assistance Scheme until 2036 and commits significant investment to strengthen long-term financing, national shipbuilding capacity, and associated infrastructure.
However, I regret to report that the design and implementation of the updated SBFAS 2025 inadvertently rescinds essential incentives that were earlier enabling small and innovative green vessel manufacturing, particularly electric and hybrid boats — which are crucial to fulfilling the decarbonisation ambitions of your vision.
How SBFAS 2025 Undermines Maritime Decarbonisation
- Removal of Green Subsidy Incentive:
Under the earlier SBFAP (2023) regime, electric and hybrid vessels enjoyed a 20% subsidy rate, significantly improving their economic feasibility versus conventional diesel boats. Under SBFAS 2025, these rates have been lowered to a flat 15% for electric propulsion, equal to diesel vessels, effectively eliminating the green premium that incentivised low-emission technologies. This weakens the cost competitiveness of sustainable propulsion in favour of fossil fuel alternatives. - Disadvantage to MSME Innovators:
Most small shipyards and marine innovation enterprises — including those developing solar-electric ferries, tugs, and inland watercraft — operate with project costs below ₹100 crore. With the revised slab structure, they lose out disproportionately due to reduced incentives, dampening MSME participation and slowing domestic innovation that aligns with Make in India and Atmanirbhar Bharat goals. - Misalignment with Climate & Strategic Goals:
India’s commitment to maritime decarbonisation, green shipping corridors, and greenhouse gas reduction in transportation must be supported by targeted financial mechanisms. Equalising incentives for diesel and electric propulsion at a time when global competitors are strengthening their green subsidies risks setting India back in the global transition to clean shipping.
Policy Recommendation for Immediate Action
To realign maritime financing with the national vision, I respectfully propose the following:
- Restore a dedicated green top-up: Reinstate an enhanced subsidy — at least 25% for electric/hybrid vessels — to ensure green builds remain financially viable in the competitive market.
- Expand policy clarity and stability: Ensure SBFAS 2025 guidelines provide predictable, long-term support for low-emission technologies, including batteries and renewable integrations, with milestone-based disbursements tied to decarbonisation outcomes.
- Create a focused EV/Green Marine Fund: Establish a dedicated “Green Maritime Innovation Fund” under the National Shipbuilding Mission to accelerate adoption of electric propulsion, hydrogen/methanol technologies, and indigenous manufacturing.
- Mandate climate alignment across schemes: All maritime financing schemes under the National Shipbuilding Mission should include clear decarbonisation performance criteria to support India’s Net Zero trajectories.
Conclusion
India stands at a pivotal moment in its maritime evolution. While the extension and strengthening of shipbuilding financing under SBFAS 2025 is a commendable step, the downgrading of incentives for green and electric vessels is an unintended regression that risks derailing innovation, slowing clean technology adoption, and weakening India’s competitive edge in future-ready maritime technologies.
I urge your esteemed office to direct appropriate policy review and corrective measures so that India’s maritime financing instruments fully reflect and advance the strategic decarbonisation and green innovation goals envisaged in your national vision.
Thank you for your leadership and consideration.
Yours sincerely,
Sandith Thandasherry
Sandith Thandasherry 