The Indian government has planned several initiatives aimed at increasing the production of 1,000 domestically built merchant ships. A key component of this effort is the establishment of a Maritime Development Fund of INR 250 billion, with the government contributing 49 percent and the remainder to be sourced from ports and the private sector. The initiative is expected to attract investments of up to INR 1.5 trillion by 2030.
India now relies on maritime routes for 95 percent of its trade volume and 70 percent of its trade value, highlighting the strategic importance of strengthening the domestic fleet.
The Shipbuilding Financial Assistance Policy (SBFAP) 2.0, with an outlay of INR 180.9 billion, has been introduced to provide direct financial subsidies to Indian shipyards. The policy is intended to support the competitiveness of Indian shipbuilders in the international market. Additionally, the Shipbreaking Credit Note Scheme offers a 40 percent credit on the scrap value of old ships dismantled in Indian yards, which can be used for purchasing new ships made in India. Customs duty exemptions on inputs for shipbuilding and shipbreaking have been extended for 10 years.
Initiatives have been launched to enhance indigenous shipbuilding and repair capabilities with the goal of reducing reliance on foreign vessels. India is targeting a position among the top 10 shipbuilding nations by 2030 and aims to ascend to the top five by 2047.
The government has also established SCI Bharat IFSC Ltd in GIFT City, Gujarat, on August 12, 2024. The company will handle chartering, vessel ownership, and other permitted shipping activities under the ship leasing framework of the GIFT IFSC. The Ministry of Ports, Shipping and Waterways noted that this initiative aims to add at least 1,000 ships to India’s fleet over the next decade and is expected to reduce freight costs by at least 33 percent by 2047.
Most of the big ships operating in Indian trade are foreign-owned, and India currently has only about 50-60 large ships within a total fleet of approximately 1,500 merchant vessels. The present policy is intended to significantly increase the number of domestically built ships.
India’s shipbuilding industry has grown from USD 90 million in 2022 to USD 1.12 billion in 2024, and is projected to reach USD 8.12 billion by 2033, reflecting a compound annual growth rate of 60 percent.
Infrastructure expansion is underway at public sector shipyards such as Cochin Shipyard, Mazagon Dock Shipbuilders (MDL), Garden Reach Shipbuilders and Engineers (GRSE), Hindustan Shipyard Limited (HSL), and private players like Larsen & Toubro (L&T) and Reliance Naval and Engineering Limited (RNEL), focusing on scaling up production with improved docks and advanced technologies.
The sector is expected to benefit from civil-military synergies, as expertise gained from constructing offshore patrol vessels (OPVs) and multipurpose vessels (MPVs) is likely to enhance merchant ship quality and production speed.
India continues to hold a significant position in the global ship recycling industry. In 2024, India was the second-largest ship recycling nation by tonnage, with a 33 percent share in 2023. The Alang Ship Breaking Yard in Gujarat is a key facility for ship dismantling in the country.
Despite these initiatives, challenges remain for India’s shipbuilding sector. High capital costs, continued dependence on imported materials such as steel and ship engines, workforce skill gaps, and bureaucratic delays are seen as factors that may slow innovation and progress.
International collaborations are increasing, with partnerships such as the India-UK project on electric propulsion for warships expected to support the adoption of advanced green technologies in the merchant shipping sector.
The government’s plan to expand shipbuilding capacity comes amid concerns that foreign vessels may avoid Indian ports during emergency situations, potentially affecting the country’s trade. The policy aims to reduce such dependence by increasing the availability of Indian-built and Indian-owned ships.
Economic and strategic ripple effects are anticipated, with estimates suggesting that every INR 1 invested in maritime power could generate approximately INR 1.82 in returns. Approximately 60 ships are currently under construction, valued at around INR 1.5 trillion, and could support about 12,000 jobs in micro, small, and medium enterprises (MSMEs) per 2,000-worker ship.
India’s shipbuilding strategy is part of a broader effort to strengthen the maritime sector by focusing on shipbuilding, repairing, and recycling.
The Ministry of Ports, Shipping and Waterways is responsible for formulating and implementing policies and programs to support port development, shipping, and inland water transport in India. The ministry is actively working to increase domestic shipbuilding capacity and reduce reliance on foreign shipping services.
