Question 1

India is already a major player in global commercial shipbuilding due to its vast coastline and massive shipbreaking industry.

Accepted Answer

While India leads globally in ship recycling (breaking) at hubs like Alang, its share in global commercial shipbuilding is less than 1 percent, heavily overshadowed by China, South Korea, and Japan.

Question 2

The Maritime Development Fund (MDF) is a 100 percent government-owned commercial retail bank.

Accepted Answer

MDF is designed as a specialized funding vehicle functioning like a Development Finance Institution (DFI), likely leveraging private, bilateral, and multilateral capital alongside government equity, tailored specifically for long-gestation maritime projects.

Question 3

Consider the following statements regarding India's maritime sector and the recent INR 69,725 crore package:
1. India currently accounts for more than 10 percent of the global commercial shipbuilding market.
2. The newly established Maritime Development Fund (MDF) is designed to provide long-tenure, low-cost financing specifically for maritime assets.
3. The Shipbuilding Financial Assistance Scheme (SBFAS) provides financial subsidies exclusively for the construction of naval defense vessels.
How many of the above statements are correct?

Accepted Answer

(a) Only one — Only statement 2 is correct. Statement 1 is incorrect because India's share in global commercial shipbuilding is less than 1 percent (dominated by China, South Korea, Japan). Statement 3 is incorrect because SBFAS is aimed at promoting the construction of 'commercial' vessels in Indian shipyards, not exclusively naval defense vessels. Statement 2 is correct as the MDF acts as a specialized DFI to address the lack of long-term funding in the sector.

Question 4

Match List I (Maritime Initiatives/Terms) with List II (Descriptions):
List I:
A. Shipbuilding Financial Assistance Scheme (SBFAS)
B. Alang
C. Right of First Refusal (ROFR)
D. Maritime Development Fund (MDF)

List II:
1. Specialized Development Finance Institution for shipping
2. Subsidy mechanism for building commercial vessels
3. Major global hub for ship recycling and dismantling
4. Chartering preference given to Indian-built and flagged vessels

Select the correct answer using the code given below:

Accepted Answer

(a) A-2, B-3, C-4, D-1 — SBFAS (A) is the government subsidy mechanism for commercial shipbuilding (2). Alang in Gujarat (B) is famous globally for ship recycling/dismantling (3). Right of First Refusal or ROFR (C) is a policy giving preference to Indian-built and flagged ships for cargo chartering (4). The Maritime Development Fund (D) is the newly created DFI for the sector (1).

Question 5

Assertion (A): The Union Cabinet significantly expanded the Shipbuilding Financial Assistance Scheme (SBFAS) to eliminate the structural cost disadvantage faced by Indian shipyards.
Reason (R): Indian commercial shipyards historically enjoy lower borrowing costs and shorter gestation periods compared to their counterparts in China and South Korea.
Select the correct answer from the codes given below:

Accepted Answer

(c) A is true but R is false. — Assertion (A) is true; the extension and expansion of SBFAS and the creation of the MDF aim to bridge the 15-20 percent cost disadvantage Indian shipyards face. Reason (R) is false; Indian shipyards actually suffer from HIGHER borrowing costs and lack of long-term financing compared to shipyards in East Asia (China, South Korea, Japan), which is precisely why government intervention was necessary.

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