New Delhi: India has become the first country in the world to launch a Shipbreaking Credit Note (SbCN) under the Shipbuilding Financial Assistance Scheme (SBFAS) 2.0. The new initiative aims to connect ship recycling with new shipbuilding, helping India strengthen its maritime industry while promoting environmentally responsible practices.
The scheme is expected to boost investment in Indian shipyards, create new business opportunities, and support the country’s long-term goal of becoming a global maritime and shipbuilding hub.
What Is a Shipbreaking Credit Note
A Shipbreaking Credit Note (SbCN) is a special financial incentive given to shipowners who recycle old ships at approved Indian recycling facilities.
These facilities must follow the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC), which sets global standards for safe and eco-friendly ship recycling. The credit note can later be used as financial support when building a new ship at an Indian shipyard. This creates a direct link between ship recycling and shipbuilding.
What are the Features of the Shipbreaking Credit Note
The new credit note system includes several user-friendly features:
Tradeable Credits
- Credit notes can be transferred to eligible stakeholders.
- Shipowners can sell or transfer them if they do not plan to build a new ship themselves.
Three-Year Validity
- The credit note remains valid for three years.
- This gives shipowners enough time to plan future investments.
Digital Processing
- The entire process is digital.
- This improves transparency, efficiency, and ease of access.
Credit Stacking
- Multiple credit notes can be combined for a future shipbuilding project.
- This increases flexibility for shipowners and investors.
Why Is Shipbreaking Credit Note Important
India is already one of the world’s leading ship recycling destinations. With the introduction of the Shipbreaking Credit Note, the government wants to encourage shipowners to recycle vessels responsibly and invest in new ships built in India. Experts believe this step will:
- Promote green ship recycling
- Increase demand for Indian-built ships
- Attract domestic and foreign investment
- Strengthen India’s maritime economy
- Support sustainable industrial growth
Boost for India’s Maritime Sector
India’s maritime sector plays a critical role in trade, logistics, and manufacturing. The shipbreaking credit note is expected to:
- Improve competitiveness of Indian shipyards
- Encourage sustainable ship recycling
- Generate employment opportunities
- Strengthen the shipping value chain
- Support the Make in India vision for manufacturing growth
Industry stakeholders believe the initiative could help India emerge as a global leader in both ship recycling and shipbuilding over the coming years.
How Does the Scheme Work
Under the SBFAS 2.0 framework, shipowners who recycle eligible ships at HKC-compliant Indian recycling yards receive a credit note.
According to government guidelines, the credit note is linked to the scrap value of the recycled vessel and can be redeemed against the construction cost of a new ship built in India. This creates a circular economy model where old ships contribute to the creation of new vessels.
First Credit Note Already Issued
The government has already issued its first ship recycling credit note in 2026. The credit note was granted after the recycling of a vessel at an approved recycling yard in Alang, Gujarat, demonstrating the practical implementation of the scheme.
What It Means for the Future
The launch of the Shipbreaking Credit Note marks a major milestone for India’s maritime industry. By rewarding environmentally responsible recycling and encouraging new ship construction, the initiative supports sustainable development while creating economic opportunities across the shipping ecosystem. As global demand for greener maritime solutions grows, India’s first-of-its-kind shipbreaking credit note could become a model for other countries looking to build a circular maritime economy.
