Mumbai: The Ministry of Ports, Shipping and Waterways has excluded chemical tankers from the list of specialised vessels eligible for state aid under the Shipbuilding Financial Assistance Scheme (SBFAS), a move that hurts local yards’ ability to take orders for such vessels.
The immediate casualty of the Ministry’s decision is Swan Defence and Heavy Industries Ltd (SDHI), which signed a Letter of Intent (LoI) on November 10, 2025, with European ship owner Rederiet Stenersen AS for constructing six IMO Type II chemical tankers of 18,000-ton capacity each in a deal worth some $220 million, industry sources said.
Contract uncertainty
Swan Defence and Heavy Industries and Rederiet Stenersen were waiting for the Ministry to finalise the guidelines for implementing the Shipbuilding Financial Assistance Scheme ahead of concluding a firm contract for the chemical tankers. The guidelines were announced on December 26, 2025.
Shipbuilding industry sources are unable to understand why chemical tankers were omitted from the list of specialised vessels, despite having been included in the draft norms discussed with stakeholders days prior to the announcement of the final version.
“It is not clear whether the omission is deliberate, intentional or an oversight,” said an industry source.
The government has budgeted ₹20,416 crore for the Shipbuilding Financial Assistance Scheme aimed at constructing large, green and specialised vessels.
Specialised vessels constructed at local yards will receive the highest quantum of financial assistance, among the three categories, from the government.
Shipyards constructing specialised vessels, irrespective of contract value, will be entitled to receive 15 per cent extra on the contract value below ₹100 crore, plus 25 per cent extra on the value above ₹100 crore as government financial assistance. To illustrate, for a specialised ship with a contract value of ₹300 crore, the shipyard will get 15 per cent extra on the contract value below ₹100 crore and 25 per cent extra on the balance ₹200 crore from the government.
Eligibility framework
The list of specialised vessels eligible for the state aid includes LNG carriers, LPG carriers, ammonia carriers, very large crude carriers, very large gas carriers, Suezmax and Aframax tankers, floating or submersible drilling or production platforms, floating production storage and offloading (FPSO) units, floating storage and offloading (FSO) units, floating storage and regasification unit (FSRU), mobile offshore drilling unit (MODU) rigs, mobile offshore production units, polar class exploration vessels, self-propelled dredgers, wind turbine installation vessel, windfarm service and maintenance vessel, self-propelled semi-submersible heavy lift and heavy transport vessel, cable laying vessel, diving support vessels with a moonpool, ocean research vessels, all passenger vessels under MS Act/SOLAS with a capacity to carry 500 or more passengers, container vessels with a capacity of 8,000 TEUs or more, green vessels that are run on eco-friendly fuels like electric batteries, methanol, hydrogen fuel cells, or ammonia, hybrid vessels that use conventional fuels (gas, LPG, oil) combined with rechargeable electric sources like batteries and vessels powered by dual-fuel main engine (methanol, ammonia, LNG, LPG etc).
The chemical tankers order from Rederiet Stenersen would, potentially, be the first for India’s largest shipyard by dry dock capacity located at Pipavav in Gujarat since re-starting operations last year under a new management led by Swan Group after surviving bankruptcy.
The Letter of Intent also has an option for constructing six more vessels of the same class, a company statement said.
Swan Defence and Heavy Industries is said to have quoted an extremely low price for each of the chemical tankers, anticipating that state aid for specialised vessels would help it make some money or margin on the deal, industry sources said.
The vessels will be designed by Marinform AS, Norway, and classed by DNV. Each ship will be built to Ice Class 1A standards and feature an advanced hybrid propulsion system. The hybrid system supports operational modes with advanced automation, improving manoeuvrability, reducing emissions, and enhancing operational flexibility.
Each tanker has been conceived as future-ready – the design allows conversion to methanol or LNG fuel and provides the capability to upgrade battery capacity to 5,000 kWh, enabling significant improvements in green performance and adaptability to alternate fuels and technologies.
