Massive $8.4 Billion Boost: India’s Cabinet Clears ₹69,725 Crore Package to Revolutionize Shipbuilding and Maritime Ecosystem

In a landmark move to cement India’s position as a global maritime power, the Union Cabinet has approved a comprehensive, decade-long package worth ₹69,725 crore (approximately $8.4 billion) aimed at revitalizing the country’s shipbuilding and broader maritime sector. The ambitious initiative is designed to drastically scale up indigenous capacity, foster technological advancements, and create a robust, globally competitive maritime infrastructure.

The package, announced following the Cabinet meeting, is built upon a strategic four-pillar approach focusing on financial assistance, long-term financing, cluster development, and policy reforms. This multi-pronged strategy seeks to address the historical challenges faced by the capital-intensive sector and align it with the national vision of Aatmanirbhar Bharat (self-reliant India).

Key Pillars of the Maritime Revolution Package

1. Revamped Financial Assistance and Incentives: A core component is the extension and enhancement of the Shipbuilding Financial Assistance Scheme (SBFAS) with a total corpus of ₹24,736 crore, running until March 31, 2036. The scheme offers crucial incentives to domestic shipyards to overcome the cost differential compared to global competitors.

• Incentives for Shipyards: Financial assistance will range from 15% for vessels valued below ₹100 crore, 20% for those above ₹100 crore, and up to 25% for high-value, specialised vessels like green and hybrid ships.
• Shipbreaking Credit Note: A significant allocation of ₹4,001 crore is made for a Shipbreaking Credit Note, similar to a vehicle scrappage policy. This will allow ship owners to avail a credit note against the scrap value of an old vessel broken in an Indian yard, which can then be offset against the cost of building a new vessel domestically.

2. Long-Term Financing through Maritime Development Fund (MDF): Recognizing the capital-intensive nature of shipbuilding, a Maritime Development Fund (MDF) with a corpus of ₹25,000 crore has been approved to provide long-term, affordable financing.

• Maritime Investment Fund: This includes a ₹20,000 crore fund, with 49% government participation, to support equity investments in key projects.
• Interest Incentivization Fund: A ₹5,000 crore fund will offer an interest subsidy of up to 3% on loans for shipbuilding and related projects, effectively lowering the cost of debt and improving project bankability.

3. Capacity Expansion and Cluster Development: The Shipbuilding Development Scheme (SbDS), with an outlay of ₹19,989 crore, aims to physically expand India’s capacity and infrastructure.

• Targeted Expansion: The goal is to expand domestic shipbuilding capacity to 4.5 million Gross Tonnage (GT) annually.
• Mega Clusters: Funds are earmarked for the development of both greenfield (new) and brownfield (expansion) shipbuilding clusters to create integrated ecosystems.
• Technology & Skilling: The scheme will support the establishment of the India Ship Technology Centre under the Indian Maritime University, boosting R&D, design, and skilling. Furthermore, it provides for risk coverage and insurance support for shipbuilding projects to protect builders from buyer defaults.

Expected Impact: Economic & Strategic

The government projects that this extensive reform package will have a profound impact on the Indian economy and its strategic standing.

• Investment & Jobs: The initiatives are expected to generate approximately ₹4.5 lakh crore in investments and create nearly 30 lakh (3 million) direct and indirect jobs across the value chain.
• Global Position: The broader goal is to catapult India from its current 16th rank in global shipbuilding into the Top 10 by 2030 and among the Top Five by 2047, marking a true maritime renaissance.
• Strategic Self-Reliance: By bolstering indigenous shipbuilding, the package will enhance national, energy, and food security by fortifying critical supply chains and maritime routes. This move is a major step toward strategic self-reliance, significantly reducing India’s dependence on foreign carriers for its trade, which currently accounts for over 95% of its trade by volume.

To oversee and coordinate the implementation of all these initiatives, the government will establish a National Shipbuilding Mission. This comprehensive package signals a deep commitment from the government to unlock the vast potential of the maritime sector, positioning it as a pivotal engine for India’s economic growth and geopolitical influence in the coming decades.