The Government has announced a ₹69,725 crore package to revitalise India’s shipbuilding and maritime ecosystem, replacing the earlier 2015 package expiring in March 2026. 

• The policy aims to enhance India’s role as a global maritime hub while aligning with energy efficiency, sustainability, and strategic security goals.
• Nearly 95% of India’s foreign trade (by volume) moves through maritime routes, but India lags behind global leaders like China, South Korea, and Japan.

Key Pillars of the Package

Financing Support

• Shipbuilding Financial Assistance Scheme (SBFAS): Extended till 31 March 2036 with a corpus of ₹24,736 crore.
• Shipbreaking Credit Note: Worth ₹4,001 crore to incentivize recycling and eco-friendly practices.
• Maritime Development Fund (MDF): Corpus of ₹25,000 crore, with two components:
  • Maritime Investment Fund: Supports investments in new shipbuilding ventures and related maritime infrastructure to accelerate sector growth.”
  • Interest Incentivization Fund: Offers financial incentives by subsidizing interest rates on loans for shipbuilders, making credit more affordable and fostering greater industry participation.
• Infrastructure status: For large commercial ships enabling access to long-term, low-cost finance.

Capacity Expansion

• Shipbuilding Development Scheme (SbDS): Outlay of ₹19,989 crore.
• Targets creation of 4.5 million Gross Tonnage (GT) shipbuilding capacity annually.
• Promotion of mega shipbuilding clusters and brownfield/greenfield yard development.
• Infrastructure expansion with insurance and risk coverage support for projects.

Technology and Skilling

• Establishment of India Ship Technology Centre under the Indian Maritime University.
• Focus on cutting-edge technology adoption (prefabricated blocks, high-capacity cranes, green shipping).
• Specialized training programmes to build a skilled workforce for the sector.

Policy, Legal, and Institutional Reforms

• Launch of a National Shipbuilding Mission for coordinated policy implementation.
• Legal, taxation, and regulatory reforms to streamline approvals, reduce compliance burden, and attract private investment.
• Incentives aligned with Atmanirbhar Bharat, encouraging Indian shipowners to place newbuild orders domestically.

Significance of this Comprehensive Package

• Economic Impact: Unlock investments worth ₹4.5 lakh crore and create nearly 30 lakh jobs.
  • Reduce India’s annual outgo of ₹6 lakh crore (~$75 billion) paid to foreign shipping companies.
  • Shipbuilding, termed as the “mother of heavy engineering”, plays a key role in employment generation, investment, and strategic independence.
• Trade Hub: India, located astride Indian Ocean shipping lanes, can emerge as a hub for logistics, vessel maintenance, and exports.
• Global Competitiveness: Position India as a strong contender in global shipping and shipbuilding markets.
  • India ranks 20th globally in shipbuilding with just 0.06% market share, aiming to enter the top 10 by 2030 and top 5 by 2047.
• Maritime Trade: Reinforces India’s maritime sector, which handles 95% of trade by volume and 70% by value.
• Geopolitical Security: Expanding indigenous shipbuilding capacity enhances energy, food, and maritime security.
• Sustainability: Push for greener, fuel-efficient, low-emission ships aligns with global climate regulations.
• Aatmanirbhar Bharat: Boosts domestic manufacturing and reduces reliance on foreign shipbuilders.

Current Challenges in India’s Shipbuilding

• Minuscule Merchant Ship Capacity: In the past decade, India has built only a handful of small merchant ships, with negligible capacity in constructing large vessels.
• Technological Gaps: Indian yards lack advanced capabilities such as prefabricated block assembly, heavy-lift cranes (~1000 tonnes), and long assembly lines, common in Korea, Japan, and China.
• Long Turnaround Times: Shipbuilding in India takes 2–3 years, compared to about 1 year in global yards, leading to sunk capital and low competitiveness.
• Weak Ancillary Ecosystem: Insufficient supply chains and ancillary industries delay construction and inflate costs.
• Financing Bottlenecks: Policy benefits (like lower interest rates) apply only to large vessels, excluding smaller builds (500 GT and above) that could be India’s starting point.
• Lack of Demand Visibility: Indian shipowners face uncertainty in long-term demand, discouraging investment in domestic shipyards despite subsidies.

Way Forward

• Start Small: Focus on ships of 500 GT and above to build incremental capacity before moving to large merchant vessels.
• Upgrade Infrastructure: Modernise yards with longer docks, high-capacity cranes, and prefab block technology.
• Strengthen Ancillary Ecosystem: Develop clusters of factories for shipbuilding components and supply chains.
• Leverage Green Fuel Policy: Align green fuel export hubs (e.g., Kakinada, Kochi) with green shipbuilding initiatives.
• Introduce Long-Term Mechanisms: Secure contracts/time charters with State utilities (coal, crude oil imports) to provide shipowners with assured demand.
• Human Capital Development: Establish specialised institutions to train shipbuilding engineers and skilled labour.
• Public-private collaboration: Public sector yards (e.g., Cochin Shipyard, Hindustan Shipyard) can collaborate with private firms and global majors for joint ventures, technology transfer agreements, and design partnerships.
  • Ensure India’s participation in global shipbuilding value chains.
• Clear benchmarks: Introducing yard performance audits and linking government incentives to achieving these benchmarks will ensure accountability and global competitiveness.
  • Example: China dominates bulk carriers, Japan excels in tankers, Korea leads in LNG carriers. India can identify a niche (e.g., medium-sized vessels, green ships) and integrate globally.

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