The Union Cabinet on Wednesday approved a comprehensive package of ₹69,725 crore to reinvigorate and revitalise the shipbuilding and maritime ecosystem in India. The package has adopted a four-pronged approach 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. 

Under this package, the Shipbuilding Financial Assistance Scheme will be extended until March 31, 2036, with a total corpus of ₹24,736 crore. The scheme aims to incentivise shipbuilding in India and includes a Shipbreaking Credit Note with an allocation of ₹4,001 crore. A National Shipbuilding Mission will also be established to oversee the implementation of all initiatives.

“Shipbuilding financial assistance scheme to help shipyards overcome cost differential. 15% financial assistance will be provided to shipyards for vessels below ₹100 crore. For vessels valued over ₹100 crore, financial assistance of 20% will be provided,” Ashwini Vaishnaw, Union Minister of Railways and Information Technology, said while briefing the cabinet.

According to Vaishnaw, green, specialised, hybrid vessels will be provided with financial assistance of 25%. “Domestic value addition will be incentivised. The scheme was formulated after studying global benchmarks,” he said. “Ship breaking credit note of 40% of the scrap value when scrapped in an Indian yard is the second aspect of the financial assistance under the scheme. The credit note can be deployed for building a new ship. The credit will not encourage both ship breaking,” he said.

In addition, the Maritime Development Fund (MDF) has been approved with a corpus of ₹25,000 crore to provide long-term financing for the sector. This includes a Maritime Investment Fund of ₹20,000 crore with 49% participation from the Government of India and an Interest Incentivisation Fund of ₹5,000 crore to reduce the effective cost of debt and improve project bankability. “65% of the trade is done by the maritime sector,” Vaishnaw said. Vaishnaw explained that perceived risks and a lack of collateral assets are also challenges in shipbuilding, and to address this, a maritime fund with a corpus of ₹20,000 crore will be established.

Furthermore, the Shipbuilding Development Scheme (SbDS), with a budgetary outlay of ₹19,989 crore, aims to expand domestic shipbuilding capacity to 4.5 million Gross Tonnage annually, support mega shipbuilding clusters, infrastructure expansion, establish the India Ship Technology Centre under the Indian Maritime University, and provide risk coverage, including insurance support for shipbuilding projects.

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 ₹4.5 lakh crore into India’s maritime sector.

Earlier this month, at the Indian Steel Association’s Steel Conclave, Piyush Goyal, the Union Minister of Commerce and Industry, exhorted steelmakers to explore the shipbuilding sector. “I think shipbuilding is an industry that is a win-win for both you (the steel industry) and the nation. We need more ships. Frankly, we need ships to be anchored and flagged in India.” He also revealed that he is in discussions with the Shipping Ministry to explore ways to flag more ships in India.