India’s Big Shipbuilding Push: From 0.06% Towards 5% of Global Output by 2030

Taking Stock of India’s Shipbuilding Policy Push

In his previous article on India’s Shipbuilding sector, the Author had pointed out that despite India’s potential to become one of the top shipbuilding nations in the world, as well as the several proactive measures from the Indian government to harness this potential, the progress had not exactly been satisfying until then.

For example, out of the IN₹ 4000 crore corpus allocated for the Shipbuilding Financial Assistance Package introduced in 2015, a mere IN₹ 241 crore had been reportedly approved for very few shipyards as of March 2023.

The situation does not appear to have changed much since then. Per the latest data released by the MoPSW, out of the IN ₹4,000 crore corpus, only IN₹ 411.6 crore had been utilised until the end of 2024.

The highest annual financial assistance allocated was IN₹ 90 crore for the construction of 50 ships, which was in 2023, and it was followed by IN₹ 84.6 crore in the year 2024 for only 19 ships. The MoPSW’s report does not provide any explanation for this drop in the number of ships, nor does it provide the tonnage or type of these ships.

To be fair to the Indian government as well as the country’s shipbuilding sector, there has been a consistent increase in the disbursement of financial assistance as well as the number of ships being built annually since 2018, and the year 2024 is the exception to this end, as it entails the drop from 50 ships constructed in 2023 to 19 ships in 2024.

Also, the figure of IN₹ 84.6 crore disbursed as financial assistance in 2024 is at a comparable level to the IN₹ 90 crore disbursed in 2023, so probably the 19 ships constructed in 2024 may have included more of specialised and green vessels that have been allotted higher financial support in the SBFA scheme. However, this is only the Author’s speculation due to the lack of clarity from the government on the tonnage and type of these ships.

This is because a Standing Committee report published in 2024 also challenged the Ministry of Shipping’s assertion that rising utilisation of financial assistance over time adequately reflects an expansion in India’s shipbuilding activity.

“The Committee observes that in the nearly eight years since the launch of the scheme, only a paltry six to seven percent of the ₹4,000 crore corpus has been utilised. The target of ₹200 crore for the next financial year appears to be rather unrealistic considering the poor response of the past few years. Since there are only two years left for the scheme, it appears that the financial benefits under the scheme have not been utilised to the extent possible,” the Standing Committee, chaired by former Rajya Sabha member V Vijaysai Reddy, noted.

The Committee also called on the government to evaluate the reasons behind the scheme’s limited uptake, recommending a closer review of whether issues such as dependence on imported inputs and relatively low levels of automation are undermining the competitiveness of Indian shipyards.

Additionally, the Standing Committee also reiterated the 2001 Rangarajan Commission’s recommendation to accord infrastructure status to ships and vessels to enable access to long-term, lower-cost financing, which at present is limited to shipyards, and recommended undertaking measures to promote domestic production of specialised steel.

Per a report by the Federation of Indian Chambers of Commerce and Industry, Indian shipyards typically need working capital amounting to around 25–35% of a vessel’s cost during construction, with borrowing costs averaging 10–10.5%. By comparison, foreign shipyards benefit from substantially lower interest rates as well as access to concessional export credit.

Overall, though, government data indicates that shipbuilding output has risen, with the number of vessels built and delivered increasing from 280 in 2020–21 to 433 in 2022–23, before easing marginally to 410 in 2023–24, pointing to a sustained upward trend in production and revenues.

Also, the Indian government remains persistent in its effort to bolster India’s domestic capabilities in shipbuilding, as is evident from its expansion of the Shipbuilding Financial Assistance (SBFA) scheme and the introduction of the Shipbuilding Development Scheme (SbDS) to form maritime clusters across the country.

Tanmay Kadam is a geopolitical observer based in India. He has experience working as a Defense and International Affairs journalist for EurAsian Times. He can be contacted at tanmaykadam700@gmail.com.