Charting India's Global Shipbuilding Roadmap

Charting India's Global Shipbuilding Roadmap

#GS-2 #GS-3 #Governance & Social Justice #Economy #Infrastructure #Growth & Development #Government Policies & Interventions

Why in News

  • A recent editorial published in the Hindu explores how India can collaborate with Korea to build its maritime capabilities.
  • The article focuses on attracting foreign direct investments and setting up local ancillary industry clusters.
  • Specialized joint ventures can help bridge technical and financial gaps in the domestic maritime sector.
  • These steps aim to transform India into a top-five global shipbuilding and maritime superpower.

Current State of India's Shipbuilding Industry

  • India accounts for less than 1% of global shipbuilding output and holds the 18th rank worldwide.
  • India's shipbuilding capacity stands at roughly 0.072 million Gross Tonnage (GT).
  • In contrast, China produces 39 million GT, South Korea reaches 20 million GT, and Japan records 9 million GT.
  • Domestic yards mostly build specialized defense vessels, coastal cargo ships, and port crafts.
  • Under the Maritime Amrit Kaal Vision 2047, the government plans to invest ₹3 lakh crore in shipbuilding clusters.
  • India aims to capture a 5% share of the global shipbuilding market by 2030 to enter the top ten nations.
  • The long-term goal is to reach the top five shipbuilding nations globally by 2047.
  • This expansion roadmap is projected to generate about 22 lakh direct and indirect jobs across industrial corridors.
  • According to a UNCTAD report, India became the world's leading ship recycling nation in 2025.
  • India achieved its Maritime India Vision (MIV) 2030 target early by capturing 35.4% of the global market share in 2025.
  • Indian yards recycled 2.99 million GT of ships in 2025, which is a nearly 60% surge from the 1.86 million GT recorded in 2024.
  • The Recycling of Ships Act, 2019 aligns domestic yards with the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships.
  • More than 115 facilities at the Alang Ship Breaking Yard (Gujarat) comply with the Hong Kong Convention after India ratified it in 2019.
  • The Shipbuilding Development Scheme (SbDS) is a ₹19,989 crore initiative focused on long-term capacity creation.
  • SbDS establishes an India Ship Technology Centre under the Indian Maritime University alongside greenfield and brownfield projects.
  • Greenfield shipbuilding clusters receive 100% capital support through a 50:50 Centre-State special purpose vehicle under SbDS.
  • Existing brownfield shipyards get 25% capital assistance for critical infrastructure upgrades like dry docks and shiplifts.
  • The Credit Risk Coverage Framework under SbDS offers government-backed insurance for pre-shipment, post-shipment, and vendor-default risks.
  • The Shipbuilding Financial Assistance Scheme (SBFAS) allocates ₹24,736 crore to set up a National Shipbuilding Mission.
  • SBFAS provides graded vessel support ranging from 15% to 25% for small normal, large normal, and specialized vessels.
  • The Shipbreaking Credit Note gives ship owners a credit equal to 40% of the scrap value when scrapping vessels at Indian yards.
  • SBFAS aims to support ₹96,000 crore in projects over the next decade to stimulate domestic manufacturing.
  • The Maritime Development Fund (MDF) provides ₹25,000 crore to finance ship acquisitions and boost Indian-flagged cargo share up to 20% by 2047.
  • The MDF aims to generate up to ₹1.5 lakh crore investment in the shipping sector by 2030.
  • Large ships received official infrastructure status in September 2025 to lower borrowing costs and improve access to long-term capital.
  • India is setting up the National Shipbuilding & Heavy Industries Park, Tamil Nadu Limited (NSHIP-TN) as its first major special purpose vehicle at Thoothukudi (Tuticorin).
  • Mega-shipbuilding and repair clusters are also mapped out across Andhra Pradesh, Gujarat via the Deendayal Port expansion, Maharashtra, and Odisha.

Role of the Shipbuilding Industry in India's Economic Development

  • Known as the mother of heavy engineering, shipbuilding offers a massive economic multiplier effect where every invested unit returns 1.8 times to the economy.
  • Shipbuilding drives the Make in India and Atmanirbhar Bharat initiatives by creating high demand for steel, electrical equipment, and electronics.
  • Every direct shipyard job creates a cascading 6.4 times multiplier effect across ancillary industries.
  • The Maritime Revitalization Package is expected to unlock 4.5 million GT of capacity, create nearly 30 lakh jobs, and attract Rs.4.5 lakh crore in investments.
  • Only about 20% of India's trade cargo currently moves on India-flagged or India-owned vessels.
  • Paying billions of dollars annually in freight charges to foreign entities drains India's foreign exchange reserves.
  • Expanding domestic yards under the Shipbuilding Development Scheme (SbDS) helps plug balance of payments vulnerabilities.
  • Commercial and naval capacities are structurally intertwined, making a strong commercial base vital for a sustained blue-water navy.
  • Indian yards have successfully delivered major platforms like Cochin Shipyard Limited (CSL) building INS Vikrant and Mazagon Dock Shipbuilders Limited (MDL) executing Project 75.
  • Public shipyards are developing green tugs and alternative-fuel vessels using electric propulsion, hydrogen fuel cells, and methanol dual-fuel technologies.
  • Mormugao Port became the country's first green port under the Green Port Certification Programme by setting up a 3 MW solar power plant.
  • With an 11,098 km coastline, India transports nearly 95% of international trade by volume and around 70% by value via maritime routes.
  • Trade routes cross vital global transit choke points like the Malacca Strait, Strait of Hormuz, and Bab-el-Mandeb strait.
  • According to the World Bank, inland water transport costs just ₹1.2 per ton-kilometer, compared to ₹1.4 by rail and ₹2.28 by road.

Challenges

  • Shipbuilding requires long gestation cycles where working capital eats up 25% to 35% of the total construction cost.
  • Indian shipbuilders face steep domestic interest rates averaging 10-10.5%, while competitors enjoy 5-6% in South Korea and 4-8% in China.
  • Indian yards suffer from high commercial bank premiums and collateral requirements for performance and refund guarantees.
  • China provides direct sovereign refund guarantees for specific vessel classes, putting Indian private yards at a major disadvantage.
  • Although India is the 2nd-largest crude steel producer, domestic mills struggle to supply consistent shipbuilding-grade steel plates.
  • Local yards face batch-to-batch variations in mechanical properties and limited class approvals from the International Association of Classification Societies (IACS).
  • The Shipbuilding Financial Assistance Scheme (SBFAS) requires at least 30% domestic content, forcing yards to balance local sourcing rules against quality needs.
  • Domestic shipping companies often prefer buying 2nd-hand foreign vessels or ordering directly from foreign yards due to high initial local costs.
  • Prolonged project execution timelines make Indian yards uncompetitive against rapid East Asian builders.
  • Delays in receiving imported components like marine propulsion engines stall assembly phases and attract heavy financial penalties.
  • Despite 7-9% of international maritime traffic passing within 300 nautical miles of its coast, India captures less than 1% of the global ship MRO market.
  • Indian shipowners routinely bypass local dry docks to sail their vessels to Singapore, Colombo, Dubai, or China for maintenance.

Way Forward

  • India should designate major shipbuilding hubs like NSHIP at Tuticorin as specialized Maritime Special Economic Zones (MSEZs) with automatic export status.
  • A single-window portal managed with Lloyd’s Register can automate carbon accounting and ESG certification during fabrication.
  • The Maritime Development Fund (MDF) should create a sovereign Vessel-as-a-Service (VaaS) leasing platform to fund keel-laying directly.
  • A dedicated Production Linked Incentive (PLI) Scheme for Marine Aggregates should offer cashbacks to global Tier-1 suppliers setting up local units.
  • The Ministry of Shipping should mandate ecosystem upgrades through the India Ship Technology Centre to adopt laser cutting and Digital Twin modeling.
  • Designating autonomous coastal shipping corridors between JNPA Mumbai and Cochin Port will support testing for Maritime Autonomous Surface Ships (MASS) using NavIC tracking.
  • Extending financial grants to domestic steel mills to process scrap steel into IACS-certified marine plates will create a closed-loop circular economy.