₹2K cr insurance corpus for shipbuilders on the cards

In a bid to allay apprehensions of shipbuilders on business sustainability, the government is likely to introduce a ₹2,000-crore corpus to protect them from major contingencies in vessel orders, according to multiple government officials in the know.

- DHRUVAKSH SAHA

The Ministry of Ports, Shipping and Waterways is in deliberations with the finance ministry and other stakeholders to set up a buyer's default insurance product through a public-sector agency backed by a government corpus. This will protect a shipbuilder from a vessel procurer backing out of an order midway or at the time of delivery, a senior official said.

"The shipbuilding sector in India is both capital intensive and nascent — one buyer's default can often threaten the survival of a shipyard. The currently proposed ₹2,000 crore corpus will cover shipbuilders against that risk, given that no such insurance product currently exists in India," the official added.

The eventual goal of the Centre is to proliferate this product in the market and have private insurers step in as well, but for the foreseeable future, it will support the sector through this corpus, which is part of the deliberations of the larger shipbuilding cluster scheme announced by Finance Minister Nirmala Sitharaman in her Union budget speech in February.