The Union Cabinet on Wednesday (September 24, 2025) approved a ₹69,725 crore package to revitalise India’s shipbuilding and reduce dependence on foreign ships as part of the government’s plan to regain the country’s maritime power.

According to an official statement, the package introduces a four-pillar approach designed to strengthen domestic capacity, improve long-term financing, promote greenfield and brownfield shipyard development, enhance technical capabilities and skilling, and implement legal, taxation, and policy reforms to create a robust maritime infrastructure.

Under the package, the Shipbuilding Financial Assistance Scheme (SBFAS) will be extended until March 31, 2036, with a total corpus of ₹24,736 crore.

“The scheme aims to incentivise shipbuilding in India and includes a Shipbreaking Credit Note with an allocation of ₹4,001 crore. A National Shipbuilding Mission will also be established to oversee the implementation of all initiatives,” the statement said.

In addition, the Maritime Development Fund (MDF) has been approved with a corpus of ₹25,000 crore to provide long-term financing for the sector.

“This includes a Maritime Investment Fund of ₹20,000 crore with 49% participation from the government of India and an Interest Incentivisation Fund of ₹5,000 crore to reduce the effective cost of debt and improve project bankability,” the statement said.

Furthermore, the statement said the Shipbuilding Development Scheme (SbDS), with a budgetary outlay of ₹19,989 crore, aims to expand domestic shipbuilding capacity to 4.5 million gross tonnage annually, support mega shipbuilding clusters, infrastructure expansion, establish the India Ship Technology Centre under the Indian Maritime University, and provide risk coverage, including insurance support for shipbuilding projects.

Last week, Prime Minister Narendra Modi made a strong pitch for ‘atmanirbharta’ in the Shipping sector, saying India pays a staggering $75 billion or approximately Rs 6 lakh crore every year to foreign shipping companies for their services.

“Till 50 years ago, our trade was carried out by 40% ships made in India, but this has now come down to just 5%,” the Prime Minister had pointed out.

India holds 0.06% of the total global shipbuilding market and is ranked 20th in the industry, but aims to break into the top ten ranking by 2030 and top 5 by 2047.

Data also show that the share of export-import (EXIM) cargo carried on Indian ships reduced sharply from 71% in 1987-88 to just 5% in 2022-23.

According to the statement, the overall package is expected to unlock 4.5 million gross tonnage of shipbuilding capacity, generate nearly 30 lakh jobs, and attract investments of approximately ₹4.5 lakh crore into India’s maritime sector.

Beyond its economic impact, the initiative will strengthen national, energy, and food security by bringing resilience to critical supply chains and maritime routes, it added.

The statement also noted that it will reinforce India’s geopolitical resilience and strategic self-reliance, advancing the vision of Aatmanirbhar Bharat and positioning India as a competitive force in global shipping and shipbuilding.

In a bid to promote Make in India, the government has included large ships in the harmonised master list of infrastructure.

Commercial vessels having a gross tonnage of 10,000 or more, under Indian ownership and flag, will be qualified to get infrastructure status.

Besides, the commercial vessels having a gross tonnage of 1,500 or more, which are built in India and are under Indian ownership and flag, will get the status.

India has a long and illustrious maritime history, with centuries of trade and seafaring that connected the subcontinent to the world.

Today, the statement said, the maritime sector remains a backbone of the Indian economy, supporting nearly 95% of the nation’s trade by volume and 70% by value.

At its core lies shipbuilding, often described as the “mother of heavy engineering”, which not only contributes significantly to employment and investment but also enhances national security, strategic independence, and the resilience of trade and energy supply chains.

“A landmark day for India’s Aatmanirbhar maritime ambitions! In a historic move, the Cabinet chaired by Hon’ble PM Shri @narendramodi Ji approves a transformative ₹69,725 crore package to revitalize our shipbuilding & maritime sector. This is a giant leap towards Aatmanirbhar Shipping & our aim of becoming a Top 5 shipbuilding nation by 2047,” Union Ports, Shipping and Waterways Minister Sarbananda Sonowal said in a post on X.

Published – September 25, 2025 11:41 am IST

Image used for representational purpose.
| Photo Credit: Reuters

The Union Budget presented by Finance Minister Nirmala Sitharaman on Saturday (February 1, 2025) made some significant proposals for promoting indigenous ship building as also acquisition of Indian-flagged ships. Among them, the Budget has proposed the setting up of a Maritime Development Fund (MDF) to support India’s maritime sector by providing financial assistance, via equity or debt securities, which will directly benefit in financing for ship acquisition and aims at boosting Indian-flagged ships’ share in the global cargo volume up to 20% by 2047.

“The initial corpus of the fund is pegged at ₹25,000 crore — where the government contribution will be 49%. The remaining balance will be contributed by major port authorities, other government entities, Central public sector enterprises, financial institutions as well as private sector. This fund will directly benefit in financing for ship acquisition,” the Union Ministry of Ports, Shipping and Waterways said in a statement. “Further, indigenous fleet will reduce dependability of foreign ships, improve balance of payment and secure strategic interests of the country. By 2030, the MDF is aiming at generating up to ₹1.5 lakh crore investment in the shipping sector.”

Also read | Govt to bring framework to unlock potential marine sector with focus on Andaman and Lakshadweep: FM Sitharaman

New clusters

Stating that the budgetary initiatives for India’s marine sector are focused on unlocking its vast potential and enhancing existing assets through upgrades, modernisation, and automation, Minister Sarbananda Sonowal said, “A key highlight is our Ministry’s development of new shipbuilding clusters of 1.0 to 1.2 Million Gross Tonnage (GT) each. This strategic push is crucial in realising India’s vision of becoming a $30 trillion economy by 2047.”

These efforts will enhance India’s global competitiveness, drive sustainable growth, and solidify its position as a leading global maritime hub.

“Considering that shipbuilding has a long gestation period, I propose to continue the exemption of Basic Customs Duty on raw materials, components, consumables or parts for the manufacture of ships for another 10 years,” Ms. Sitharaman said in her budget speech. “I also propose the same dispensation for ship breaking to make it more competitive.”

The scheme for mega shipbuilding clusters will provide direct capital support in the form of creating the breakwater along with capital dredging and also proposes a 10-year rent holiday for the land, if not provided at a nominal rate, the Ministry said in a statement. Investment is also designed to support creation of trunk infra like roads, utilities, sewage treatment among others. “The proposed allocation of ₹6,100 crore aims to support India’s existing shipyards in upgrading, modernising, and automating their operations, enhancing efficiency, utilisation, and overall output.”

The Budget has also extended the Shipbuilding Financial Assistance Policy 2.0, aimed at providing direct financial subsidies to Indian shipyards. This initiative seeks to help in securing orders by offsetting operational cost disadvantages, thereby strengthening the domestic shipbuilding industry. To be financed via budgetary support, the total outlay of the scheme is ₹18,090 crore, the statement added. The Budget also has an allocation of ₹6,100 crores to upgrade, modernise and automate Indian ports operations to upscale efficiency.

In addition, Ms. Sitharaman noted that presently the tonnage tax scheme is available to only sea going ships and added that the benefits of existing tonnage tax scheme are proposed to be extended to inland vessels registered under the Indian Vessels Act, 2021 to promote inland water transport in the country.