India Plans to Spend $6 Billion to Support its Maritime Sector
India has firmed up its ambition to become a global maritime powerhouse, with the government allocating around $6 billion to the shipping sector in the 2025-26 fiscal year. On Saturday, India’s Finance Minister Nirmala Sitharaman presented to Parliament budget documents, revealing billions of dollars the government intends to spend in upgrading the country’s maritime infrastructure.
The government has proposed financial assistance of $3 billion to help set up a Maritime Development Fund (MDF). The government will contribute 49 percent of the fund with the remaining balance to be contributed by port authorities and the private sector. The fund will be accessed via equity or debt options. Primarily, the fund is targeted in financing ship acquisitions, consistent with the government policy of boosting Indian-flagged ships’ share in the global market by up to 20 percent by 2047. In addition, an indigenous fleet will reduce India’s dependence on foreign ships, improving the balance of payments. The government believes that by 2030, the MDF will be generating up to $17 billion in investment in the shipping sector.
“It is reassuring to see that the budgetary initiatives for India’s marine sector are focused on unlocking its vast potential and enhancing existing assets through upgrades, modernization and automation,” said the Minister of Ports, Shipping and Waterways (MoPSW), Sarbananda Sonowal.
Support to domestic shipbuilding is another key highlight of the budget. Recently, MoPSW announced the development of shipbuilding clusters to be established in five states. Each cluster will have capacity for up to 1.2 million gross tonnes per year. This initiative is in line with the government’s goal of making India a top-10 player in the global shipbuilding market by 2030.
To support this scheme, the 2025-26 budget will provide capital for facilitating the creation of breakwaters and dredging at the designated clusters. Further, the government has proposed a 10-year rent holiday for the land, if not provided at a nominal rate. There is also an additional allocation of $700 million to existing shipyards for upgrades and automation.
Meanwhile, the budget has extended the Shipbuilding Financial Assistance Policy (SBFAP) with an allocation of $2 billion. The SBFAP initiative provides financial subsidies to Indian shipyards, helping to offset operational cost disadvantages.
Notably, the budget will support the Shipbreaking Credit note. This scheme is intended to incentivize ship scrapping by issuing a credit note of 40 percent of the scrap value, which can be reimbursed to buy a new modern vessel built at a domestic yard.