Indian Government to Pay 30% Subsidy to Build Green Shipping

India sustainable shipping
India's Ministry of Ports, Shipping & Waterways announced the new initiatives aimed at sustainability and port operations (MoPSW)

Published May 23, 2023 4:28 PM by The Maritime Executive

The Indian government unveiled a series of initiatives designed to encourage the adoption of green technology in the shipping industry by providing financial support and also focusing on port modernization. The announcements were made during a two-day conference hosted by India’s Ministry of Ports, Shipping & Waterways (MoPSW) followed from its earlier announcement to begin developing hydrogen ports in India. The government placed a high priority on modernizing the shipping industry earlier this year imposing an age limit on ships sailing under the Indian flag or operated by Indian shipowners.

Union Minister of Ports, Shipping & Waterways Shri Sarbananda Sonowal announced the five initiatives focusing on green shipping and digitization of the ports. He emphasized the country’s clear focus to promote green shipping and bring efficiency to port operations. He said the new efforts would bring in more sustainable development in the maritime industry. 

Under the first of the five initiatives, the government will increase the financial support level when companies are building green shipping. Under the financial aid for shipbuilding, the government currently provides 20 percent financing, reduced by three percent a year, for newly constructed vessels. For green vessels, the government will increase the support to 30 percent of the total project cost. They believe this will create an incentive for shipowners to adopt alternative fuels.

The government also recently announced that it would be adding vessels for the offshore wind industry to the subsidy program. A total of 21 shipyards are registered in the Ship Building Financial Assistance program which provides assistance for specialized vessels built in country. Wind turbine installation vessels, semi-submersible heavy life vessels for the wind sector, and service and maintenance vessels will now be eligible for the program. This comes as India is looking to accelerate development of its offshore wind power industry, The government hopes to have the first projects by 2026.

The government recently announced its Green Tug Transition Program with the goal of starting to introduce hybrid tugs by 2025. By 2030, the government said at least half of all tugs are likely to be converted to green operations. This would contribute to achieving the sustainability goals by reducing port emissions.

To further encourage adoption and provide a model for the new technologies, NoPSW said it will provide two hybrid hydrogen-fueled tugs to each of four government-owned ports. This will include the operations at Jawaharlal Nehru Port, VO Chidambaranar Port, Paradip Port, and Deendayal Port. 

Port modernization continues to be a key focus for MoPSW. The minister said that efficiency in ports has already improved significantly. In the past eight years under the modernization program, 90 percent of India’s ports have completed updating efforts. As a next step, Jawaharlal Nehru Port and VO Chidambaranar Port will become smart ports by next year. A single portal will also be created to facilitate and monitor river and sea cruises.

Sonowal highlighted the clear focus on sustainability and port digitalization. He said the five new programs would each contribute to more sustainable development in the ports. They are placing a priority on developing green hydrogen hubs at Deendayal Port and VO Chidambaranar Port. This builds on the program announced on May 11 that plans to make green hydrogen-based fuels available at the nation's biggest ports by 2035. They said that 12 ports would get LNG capabilities by 2030 with green hydrogen / green ammonia bunkering capabilities to follow by 2035.

MoPSW reports that there was an in-depth analysis and discussion on improving port administration, standardization, and sharing cargo handling in major ports during the two-day event. The focus was on how to further enhance the handling of cargo.

By implementing the programs India believes it can emerge as a leader in the global maritime industry. The minister said progress would be reviewed at mid-year on each of the initiatives and strict attention would be taken in the case of any delays in completion of the projects.