Meanwhile, The Economic Times, November 5, 2014 reported:
The shipping ministry has asked the central bank to relax rules allowing shipbuilding companies which are sitting on huge losses to go in for a second round of debt restructuring.
The shipbuilding industry in India is in a turmoil. Manufacturers had built up large capacities, often by taking on debt, when growing global trade had driven up demand for ships. But, over the past five years, as the global economy hit an uncertain patch, new orders dried up and existing orders were either postponed or cancelled. To add to the local industry's woes, the government withdrew a programme that offered a 30% subsidy on the cost of building ships. Lack of government support led overseas competitors to outbid Indian manufactures in a market where new contracts had become few and far between.
Among the top shipbuilding companies, Bharati Shipyard, ABG Shipyard, Hindustan Shipyard and Goa Shipyard are all in some sort of stress. Some public sector shipbuilding companies like Cochin Shipyard have managed to stay afloat because of orders from the navy and air force, where the profit margins are decided in advance.