The Union Cabinet has taken a historic step to strengthen India’s maritime power and advance the vision of Atmanirbhar Bharat. The government has approved a massive package worth ₹69,725 crore aimed at reviving the country’s shipbuilding industry and reducing dependence on foreign vessels.

About the Package

¨     Four Pillar Approach: The package introduces a four-pillar approach 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.

¨     Shipbuilding Financial Assistance Scheme (SBFAS): Under the package, the Shipbuilding Financial Assistance Scheme (SBFAS) will be extended until March 31, 2036, with a total budget of ₹24,736 crore.

¨     Shipbreaking Credit Note: SBFAS aims to incentivise ship building in India and includes a Shipbreaking Credit Note with an allocation of ₹4,001 crore.

¨     National Shipbuilding Mission: A National Shipbuilding Mission will be established to oversee the implementation of all initiatives.

¨     Maritime Development Fund (MDF): MDF has been approved with a corpus of Rs.25,000 crore to provide long-term financing for the sector. This includes a Maritime Investment Fund of Rs.20,000 crore to reduce the effective cost of debt and improve project bankability.

¨     Shipbuilding development programme (SbDS): The SbDS with a Rs.19,989 crore budget, aims to boost domestic shipbuilding capacity to 4.5 million GT (Gross Tonnage) per year. It will support mega shipbuilding clusters and infrastructure expansion, establish the India Ship Technology Centre, and offer risk and insurance support for shipbuilding projects.

Significance of the Package

¨     Economic: The overall package is expected to unlock 4.5 million Gross Tonnage of shipbuilding capacity, generate nearly 30 lakh jobs, and attract investments of approximately Rs.4.5 lakh crore into India’s maritime sector.

¨     Supply chain: The initiative will strengthen national, energy, and food security by bringing resilience to critical supply chains and maritime routes.

¨     Geopolitical and Strategic Resilience: It will reinforce India’s geopolitical resilience and strategic self-reliance, advancing the vision of Aatmanirbhar Bharat and positioning India as a competitive force in global shipping and shipbuilding.

India’s Shipbuilding Status

¨     The maritime sector remains a backbone of the Indian economy, supporting nearly 95% of the nation’s trade by volume and 70% by value.

¨     India currently accounts for less than 1% of the global shipbuilding market, contributing around 18 million deadweight tonnage.

¨     According to DG Shipping as on 31st March 2024, Indian shipping tonnage was 13.66 million Gross Tonnage (GT) with 1521 ships.

¨     During the 2023-24 FY Indian owned ships/vessels carried 4.11% of India’s overseas trade.

¨     India is ranked 16th in the industry, but aims to break into the top ten ranking by 2030 and top five by 2047.

¨     Ship building capacity of a unit is defined in terms of the maximum carrying capacity of the ship that can be built by a shipyard measured in terms of Dead Weight Tonnage (DWT).

¨     Amongst reporting public sector companies, Cochin Shipyard Ltd. (CSL) possess the maximum ship building capacity (110 thousand DWT) followed by Hindustan Shipyard Ltd. (HSL) (80 thousand DWT), Goa Shipyard Ltd. (GSL) (4.5 thousand DWT).