India has remained a marginal global player in the shipbuilding sector, accounting for barely a fraction of the world’s order book. However, recent policy measures, global supply shifts and strengthening domestic industrial capabilities are setting the stage for a potential revival. With a Rs 697.25 billion comprehensive reform package launched in 2025 and a strategic vision to become one of the world’s top five shipbuilding nations by 2047, India aims to reposition shipbuilding as an industry driving growth, jobs and technological advancement.
Key government initiatives and policies
India’s shipbuilding revival is being driven primarily by government policy, recognising its importance in trade, security and industrial growth. The policy announcements focus on expanding domestic capacity, improving access to affordable long-term financing, and building a globally competitive maritime ecosystem.
The Shipbuilding Financial Assistance Scheme aims to strengthen India’s domestic shipbuilding and make local shipyards more competitive globally. With a total outlay of Rs 247.36 billion, it offers financial incentives of 15 per cent for smaller vessels, 20 per cent for larger ones and 25 per cent for green or specialised ships, while requiring at least 30 per cent domestic value addition. Around Rs 205.54 billion is allocated for these incentives until March 2036. The National Shipbuilding Mission oversees the scheme, ensuring proper implementation, fund management and long-term industry coordination.
The Maritime Development Fund, with an outlay of Rs 250 billion, aims to address the issue of limited access to affordable financing. It follows a two-part structure. The first part, the Maritime Investment Fund, has an initial corpus of Rs 200 billion and follows a blended finance model, with 49 per cent government funding and 51 per cent from private and institutional investors. This is expected to attract more private investment into shipping capacity, shipyards, repair facilities, ports and inland waterways. The second component, the Interest Incentivization Fund, will allocate Rs 50 billion over 10 years (until March 2036). It offers up to 3 per cent interest support on loans to shipyards, helping reduce borrowing costs and improve access to credit.
The Shipbuilding Development Scheme, with a total corpus of Rs 199.89 billion, provides long-term structural support to strengthen India’s shipbuilding ecosystem through infrastructure creation, risk mitigation and capability enhancement. Spread over a 10-year horizon until March 2036, the scheme focuses on developing robust shipbuilding clusters, with Rs 99.30 billion earmarked for greenfield projects, Rs 82.61 billion for brownfield capacity expansion, Rs 14.43 billion for shipbuilding risk coverage to improve project viability and investor confidence, and Rs 3.05 billion allocated for capability development initiatives aimed at enhancing technical expertise and meeting industry standards.
Complementing these initiatives, legal, policy and process reforms aim to create an enabling ecosystem for sustained sectoral growth. A key milestone is the grant of infrastructure status to large ships, facilitating access to long-term, low-cost financing, while demand aggregation initiatives, particularly through oil and gas PSUs, are expected to drive the construction of over 110 vessels domestically over the next decade. These efforts are reinforced by a comprehensive overhaul of maritime legislation, including the introduction of the Bills of Lading Act, 2025; the Carriage of Goods by Sea Act, 2025; the Coastal Shipping Act, 2025; the Merchant Shipping Act, 2025; and the Indian Ports Act, 2025, all aimed at modernising regulatory frameworks and aligning India’s maritime sector with global standards.
Overall, these measures aim to drive investment, create jobs and strengthen India’s economic resilience through better infrastructure, local manufacturing and supportive policy reforms.
Green transition in shipbuilding
Sustainability is becoming a defining factor in the future of shipbuilding, and India is aligning its strategy to this global shift. A key pillar of this transition is the integration of the National Green Hydrogen Mission, which aims to promote the use of clean fuels such as green hydrogen and its derivatives in the shipping ecosystem. Alongside this, there is a growing focus on designing and developing low-emission vessels, including those powered by alternative fuels like LNG, methanol and hydrogen, to reduce the sector’s carbon footprint. India is also focusing on sustainable ship recycling practices by strengthening its capabilities under global standards and promoting a circular economy approach, where materials are efficiently reused and waste is minimised. Together, these initiatives not only improve the environmental performance but also enhance its global competitiveness by ensuring compliance with evolving international regulations and sustainability benchmarks. By embedding green practices across the value chain, India is positioning itself as a forward-looking and responsible player in the global maritime sector.
Private sector and global partnerships
The revival of India’s shipbuilding sector will depend significantly on strong private sector participation and deeper international collaboration. Increasingly, global shipbuilding companies are exploring joint ventures and strategic tie-ups with Indian shipyards to tap into the country’s cost advantages and growing domestic demand. Partnerships with leading shipbuilding nations such as South Korea and China are particularly important, as they bring advanced design capabilities, modern construction techniques and operational efficiencies. For instance, collaborations with major Korean players such as Hyundai Heavy Industries and Samsung Heavy Industries have been explored to strengthen technical expertise and improve productivity in Indian yards, while Chinese firms have shown interest in infrastructure development and equipment supply within the broader maritime ecosystem.
In addition, foreign direct investment and technology transfer agreements can play a critical role in accelerating capability building, enabling Indian shipyards to move up the value chain and compete globally. Public-private partnerships will further be essential in developing large-scale shipbuilding clusters, modernising port-linked infrastructure and ensuring efficient project execution. Together, these efforts can help bridge existing capability gaps and attract long-term capital.
Key challenges
Despite strong policy momentum, India’s shipbuilding revival faces deep-rooted challenges that have historically constrained its growth. Shipbuilding is dominated by China, South Korea and Japan, which benefit from scale, advanced technology and integrated supply chains. India’s global share remains negligible at around 0.1 percent of the order book, highlighting the gap it must bridge. Further, high capital costs, limited access to long-term financing and relatively higher production costs have made Indian shipyards less competitive internationally. Although the Maritime Development Fund seeks to address this, execution will be critical. Lastly, while India has a large labour pool, advanced ship design, automation and digital shipbuilding capabilities remain underdeveloped compared to global leaders.
Growth drivers and the way forward
India’s shipbuilding sector is entering a more favourable phase, supported by a visible and diversified demand pipeline. A key driver is the expansion of global trade and the ongoing realignment of supply chains, which are increasing demand for cargo vessels, tankers and specialised ships. With major shipbuilding countries operating at high capacity and facing extended delivery timelines, there is a growing spillover of orders toward emerging players like India. This external demand is complemented by a gradual shift within the country toward domestic shipbuilding, as Indian shipping companies reassess their dependence on foreign yards in light of policy incentives and geopolitical uncertainties.
Another important growth driver is the rising demand for specialised vessels such as offshore support vessels, dredgers, coastal ships and inland waterway vessels. These segments typically require customisation and shorter production runs, making them well-suited to the current capabilities of Indian shipyards. At the same time, increasing interest from global companies in partnering with Indian shipbuilders is expected to strengthen the sector’s technological and operational capabilities. Such collaborations can facilitate access to advanced design expertise, improve quality standards and integrate Indian yards more closely into global supply chains.
As one of the fastest-growing major economies, the country is witnessing steady increases in trade volumes, which in turn are driving demand for shipping capacity. This is aligned with a wider policy push to strengthen manufacturing and exports, positioning shipbuilding as a strategic industry with strong linkages to the steel, engineering and logistics sectors. Together, these factors create a supportive ecosystem for sustained capacity expansion.
Finally, the global transition toward greener shipping presents a significant opportunity. Increasing regulatory and environmental pressures are driving demand for energy-efficient vessels, alternative fuel technologies and hybrid propulsion systems. For India, this shift offers a chance to build capabilities around next-generation shipbuilding rather than legacy technologies.
Going forward, to fully capitalise on this opportunity, India must focus on building integrated maritime clusters, strengthening domestic supply chains and encouraging global partnerships that enable technology transfer and scale efficiencies. Investments in skill development and research and development will also be key to sustaining long-term growth. The sector today stands at a crucial inflection point, with a unique convergence of policy support, favourable global dynamics and rising domestic demand creating a window of opportunity. However, realising this potential will require sustained execution, long-term commitment and close collaboration between the government, the private sector and global partners. If managed effectively, shipbuilding can emerge as a cornerstone of India’s next phase of economic growth, strengthening its position in the global maritime landscape.
Simran Kaur
