India Commits $8B to Expand Shipbuilding Industry to Reach Top 5 Worldwide
The Indian government approved financing and a series of steps designed to support the ambitious plan outlined by Prime Minister Narendra Modi to transform Indian shipbuilding to be among the top five worldwide. Calling shipbuilding the “mother of heavy engineering,” the government approved a total investment of just under $8 billion, including the Shipbuilding Financial Assistance Scheme scheduled to run until March 31, 2036.
The Prime Minister highlights the critical nature of shipbuilding as part of the initiative to strengthen national, energy, and food security and to reinforce India’s geopolitical resilience and strategic self-reliance. Revitalizing India’s shipbuilding and maritime ecosystem, Modi says, will drive investment and create large numbers of new jobs both for domestic shipping and as an exporter of newbuilds.
“India has a long and illustrious maritime history, with centuries of trade and seafaring that connected the subcontinent to the world,” the government news agency said announcing the adoption of the budget. “Today, the maritime sector remains a backbone of the Indian economy, supporting nearly 95 percent of the nation’s trade by volume and 70 percent by value.”
The package, they said, introduces four pillars 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. Reports said that by giving infrastructure status to large ships, the government is providing tools to use them as collateral for loans. It will ensure easier and cheaper financing for the industry.
At the heart of the program are three financing packages. They will provide nearly $2.8 billion for the shipbuilding financing initiative. Another nearly $2.3 billion will be in a maritime development fund, and a further $2.25 billion will be devoted to expanding domestic shipbuilding capacity to 4.5 million gross tons. A separate proposal, the Shipbreaking Credit Note scheme, incentivizes ship owners to recycle their vessels in India, offering a credit worth approximately 40 percent of the ship's scrap value, which can be applied within three years to building a new ship in India.
Among the elements of the program that have been previously discussed are plans to develop new greenfield shipyards. The plan calls for clusters of shipbuilding capabilities to be developed around the country. The country’s large shipbuilders, including Cochin Shipyard, have already begun to develop international partnerships as they look to expand their capabilities to build larger ships.
India has also been working to develop interest from the leading Western shipping companies, both for ship repair and construction. It has been linked to discussions with the largest container carriers, including MSC Mediterranean Shipping Company, Maersk, and CMA CGM.
The government highlights the massive amount of money India spends each year with foreign shipping companies. Prime Minister Modi is extolling a Made in India strategy to enhance the country’s economy and build greater self-reliance.