The Indian government has approved a comprehensive package worth nearly Rs 70,000 crore to revitalize the nation's shipbuilding and maritime ecosystem, with the goal of becoming a major player in the global shipbuilding industry. The investment aims to strengthen domestic capacity, improve long-term financing, promote greenfield and brownfield shipyard development, and enhance technical capabilities and skilling in the sector.

Four-Pillar Approach

The approved package is structured around a four-pillar approach:

1. Strengthening Domestic Capacity: Aims to enhance India's ability to construct and maintain ships within the country.
2. Improving Long-Term Financing: Focuses on providing the necessary financial support for shipbuilding projects, which often require substantial capital.
3. Promoting Shipyard Development: Encourages the establishment of new shipyards (greenfield) and the expansion/modernization of existing ones (brownfield).
4. Enhancing Technical Capabilities and Skilling: Seeks to improve the technical expertise of the workforce in the shipbuilding industry.

Key Components of the Package

The Rs 70,000 crore package consists of three major schemes:

• Shipbuilding Financial Assistance Scheme (SBFAS): With a corpus of Rs 24,736 crore, this scheme will be extended until March 31, 2036. It aims to incentivize shipbuilding in India by providing financial assistance to shipbuilders. Vessels costing less than Rs 100 crore will receive 15% assistance, those over Rs 100 crore will get 20%, and green or hybrid vessels will receive 25%. The scheme also includes a "ship breaking credit note," allowing shipowners to claim 40% of a vessel's scrap value when dismantled at an Indian yard toward constructing a new vessel.
• Maritime Development Fund (MDF): This fund will have an initial corpus of Rs 20,000 crore, expandable to Rs 25,000 crore. It will provide equity financing for developing shipyards, with 49% participation from the government and 51% from the private sector and other public sector units. An Interest Incentivisation Fund of Rs 5,000 crore is included to reduce the effective cost of debt and improve project bankability.
• Shipbuilding Development Scheme (SBDS): With a budgetary outlay of Rs 19,989 crore, this scheme aims to expand domestic shipbuilding capacity to 4.5 million gross tonnage annually and support mega shipbuilding clusters and infrastructure expansion. A National Shipbuilding Mission will be established to oversee the implementation of all initiatives.

Expected Outcomes

The government anticipates that this investment will generate Rs 4.5 lakh crore in investment and produce over 2,500 vessels. The initiative is expected to unlock 4.5 million gross tonnage of shipbuilding capacity, generate approximately 30 lakh jobs, and attract investments of around Rs 4.5 lakh crore into India's maritime sector. It is also intended to reduce India's reliance on foreign ships, which currently accounts for around 95% of the country's shipping needs.

Strategic Significance

The government views this initiative as crucial for strategic independence, building resilient supply chains, and enhancing maritime capabilities, ultimately reinforcing India's geopolitical resilience and realizing Aatmanirbhar Bharat (self-reliant India) through a developed maritime sector. The infrastructure status granted to large ships is expected to lower financing costs and extend loan tenures, making large vessel projects more viable and boosting domestic shipbuilding competitiveness. Defence shipbuilders like Mazagon Dock Shipbuilders, Cochin Shipyard, Garden Reach Shipbuilders, and L&T shipyard are expected to benefit substantially from these developments.