The Modi government is intensifying efforts to position India as a major global maritime hub, with plans to invest Rs 75,000 crore in establishing three new shipyards along the country’s east and west coasts, according to sources. This substantial investment, spread over four to five years, will enable the shipyards to both build and repair vessels.
According to the Union Ports Ministry, the government aims to develop three greenfield shipbuilding clusters while also supporting the expansion of existing shipyards through brownfield projects. “Each greenfield cluster is expected to attract around Rs 25,000 crore in investment, though the final figures may vary depending on the selected locations and the scale of the shipyards,” the ministry stated.
The government has revealed that five states are currently in discussions with both domestic and international shipbuilders to identify the most suitable locations for the upcoming shipyards. One of these facilities may also house a shipbreaking unit, which could supply raw materials for shipbuilding activities.
The Ministry of Ports, Shipping, and Waterways (MoPSW) stated, “MoPSW is in the process of finalizing schemes to support the development of these greenfield clusters. Additionally, a dedicated scheme is being prepared to aid the brownfield expansion of existing shipyards.”
Greenfield projects involve building entirely new facilities from scratch, whereas brownfield projects focus on expanding or upgrading existing infrastructure. The total proposed investment of Rs 75,000 crore is expected to come from a combination of central government funding and contributions from various firms. Indian state-owned companies are also actively seeking partnerships with international shipbuilders, particularly from countries like South Korea and Japan, to bolster their shipbuilding capabilities.
India’s public sector shipbuilders are actively pursuing joint ventures with Korean counterparts, while parallel talks are ongoing with both Japanese and Korean firms regarding their involvement in the proposed shipbuilding clusters.
A major push for “Make in India”
This shipbuilding drive is a key component of the government’s broader “Make in India” initiative, aimed at enabling domestic production of ships across all categories. The strategy also focuses on boosting the number of cargo ships that are built, owned, and flagged in India. Currently, India’s presence in the global shipbuilding market is less than 1%. The government plans to raise the share of Indian-built ships in the national fleet from 5% to 7% by 2030 and ambitiously targets 69% by 2047.
Shipping Secretary T.K. Ramachandran confirmed that five states—Andhra Pradesh, Odisha, Tamil Nadu, Gujarat, and Maharashtra—are under consideration for establishing the shipbuilding clusters. Among them, Tamil Nadu, Gujarat, and Odisha have already been finalised for the first three clusters. These states have moved quickly, with land identified and notified for the projects. They have also established special purpose vehicles (SPVs) and commissioned techno-economic feasibility reports (TEFRs) to advance the initiative.
Preliminary viability assessments have already been carried out at several proposed sites, with additional studies underway. According to the Ministry, shipbuilders will be briefed on the findings and encouraged to invest in the selected locations.
Anshuman Magazine, Chairman & CEO for India, Southeast Asia, the Middle East, and Africa at CBRE, a global real estate consulting firm, commented on the initiative: “A major capital investment through a public-private partnership model is at the core of India’s bold ambition to become a global shipbuilding powerhouse by 2047. While the scale of the challenge is considerable, the opportunity is equally significant.”
Magazine further highlighted India’s geographical advantage, stating, “As a peninsular nation with a vast coastline stretching across nine states, India enjoys a strategic edge in maritime logistics, with access to the Arabian Sea, the Bay of Bengal, and the Indian Ocean.”
He also pointed out that the growing regional market, particularly the supply chains of emerging Southeast Asian economies, offers India a tremendous opportunity to emerge as a reliable, cost-effective hub for shipbuilding in the global arena.
Significant efforts underway
Indian officials have been actively engaging with traditional shipbuilding nations, including Korea, Japan, and several Scandinavian countries, to explore opportunities for collaboration and joint ventures. As a result of these discussions, several partnerships between international shipbuilders and Indian public and private sector companies are expected to be announced in the coming months.
To further bolster the sector, the government proposed the creation of a Rs 25,000 crore Maritime Development Fund in the FY26 budget. This fund aims to drive the development of manufacturing clusters, with a strong focus on shipbuilding and shipbreaking.
In addition, the budget recommended a revamp of the current Shipbuilding Financial Assistance (SBF) policy to help offset cost disadvantages faced by domestic players. It also proposed the introduction of shipbreaking Credit Notes, designed to incentivise the purchase of ships built within India.
Policy support and long-term vision
As part of the FY26 budget, large ships have been added to the Infrastructure Harmonised Master List (HML), a move that simplifies the process of ship acquisition by easing access to financing. Additionally, the budget proposes extending the exemption on baseline customs duties for another ten years on raw materials, components, consumables, and parts used in shipbuilding. These measures are expected to provide a significant boost to the industry, although formal government notifications for these programs are still awaited.
Under its long-term strategies, Maritime Vision 2030 and Vision 2047, India aims to rank among the top 10 shipbuilding nations and the top 5 ship-owning countries globally. To achieve this, the government plans to invest between Rs 3 lakh crore to Rs 3.5 lakh crore in the development of ports, shipping infrastructure, and inland waterways.
This shipbuilding push also seeks to address industry concerns about market competitiveness, which have been affected by rising and unpredictable shipping costs. Strengthening India’s domestic shipping capabilities would help stabilise freight rates and reduce reliance on foreign carriers, particularly during global disruptions such as the Covid-19 pandemic, the Russia-Ukraine war, the Red Sea crisis, and the Iran-Israel conflict. A stronger domestic fleet is expected to provide more reliable and cost-effective shipping options during such black swan events.
Navigating challenges in shipbuilding
India currently ranks 22nd in the global shipbuilding industry, while China and South Korea dominate the sector. In 2023, China built over half of the world’s merchant ships by gross tonnage, 33 million GT, accounting for 51% of all merchant ships constructed that year. Reports indicate that 62% of global shipbuilding orders are placed with Chinese shipyards.
To tackle China’s dominance, India has been exploring partnerships with South Korea and Japan in a strategic and measured way. At the same time, India is working to boost its domestic shipbuilding capacity to reduce dependence on foreign vessels. Currently, India owns just 2% of the world’s maritime tonnage but spends over $75 billion annually on leasing ships.
One of the biggest challenges for India’s shipbuilding industry has been securing funding, as the typical lifespan of a ship is 25 to 30 years, making returns a long-term prospect. Recognising these hurdles, the Modi administration has introduced crucial legislative reforms aimed at revitalising the sector and supporting its growth.
Key announcements in the Union Budget
In the 2025-2026 Union Budget, Finance Minister Nirmala Sitharaman announced that ships above a certain size will be added to the harmonised master list of infrastructure, making them eligible for financial incentives. This move aims to modernise fleets and attract private investment to the shipbuilding sector.
The budget also introduced a Maritime Development Fund (MDF) with a corpus of Rs 25,000 crore to provide long-term funding for India’s marine industry, especially for ship acquisition. The central government will contribute up to 49% of the fund, with the remainder coming from private investors, port authorities, government agencies, central public sector enterprises, and financial institutions.
Additionally, new large shipbuilding clusters will be established across the country. Shipbuilders will receive direct financial support for capital dredging and breakwater construction, and where affordable options aren’t available, a 10-year rent holiday on land will be offered. The government also highlighted plans to invest in essential trunk infrastructure, including utilities, roads, and sewage treatment, to support the growth of the shipbuilding industry.
The Union Budget also extended the Shipbuilding Financial Assistance Policy (SBFAP) 2.0, which provides direct financial support to Indian shipyards. To promote ship recycling, the Shipbreaking Credit Note program offers a credit worth 40% of the scrap value, refundable against the purchase of new “Made in India” vessels.
Skill development in the shipbuilding sector was another key focus, with dedicated funds allocated for human resource training to strengthen India’s position as a global leader in maritime talent.
Additionally, funding for Shipbuilding Capability Development Centres will support the testing and evaluation of shipping projects, as well as the development of innovative ship designs and technical solutions.
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