The payout of these subsidy would be spread over 10 years or so since Government subsidy accrues to the shipbuilders only when the ships are delivered — and orders for the next five years would extend for much beyond five years. At present, the Government provides a shipbuilding subsidy of 30 per cent, subject to certain conditions, that would end on August 14 this year.

Shipbuilding firms, meanwhile, point out that given the current level of taxes and duties on inputs for shipbuilding like steel-sheets, the industry would return almost 50 per cent of the subsidy benefits to the Government in the initial few years and would return more than the subsidy in subsequent years.

The South Korean companies, the world's three largest shipbuilders, are receiving premium prices for their vessels, fattening profit margins, while a growing backlog will keep their dockyards running at full capacity for years to come.