India can become global Shipbuilding Hub

Why in News?

Defence Minister stated that declining or saturated capacity in traditional shipbuilding centres offers India an opportunity to become a global hub for shipbuilding, ship repair and maritime manufacturing. 

Expansion projects of Garden Reach Shipbuilders and Engineers (GRSE) and Yantra India Limited are expected to strengthen indigenous shipbuilding, metallurgical and precision manufacturing capabilities.

Distinguishing the Three Segments: 

• Ports: Infrastructure where cargo and vessels are handled.
• Shipping: Ownership and operation of merchant vessels transporting cargo.
• Shipbuilding: Construction, repair and retrofitting of commercial and defence vessels.

Thus, better port performance does not automatically produce a larger Indian-owned fleet or a globally competitive shipbuilding industry.

Present Status: 

• India’s major ports handled a record 915.17 million tonnes of cargo in 2025-26, up from 581 million tonnes in 2014-15. Their cargo-handling capacity increased from around 873 MMTPA in 2014 to 1,728 MMTPA in 2025-26.
• Average vessel turnaround time declined from about 94 hours in 2014 to approximately 49 hours in 2025-26, indicating improved port efficiency.
• Under Sagarmala, 845 projects worth ₹6.06 lakh crore had been identified, of which 315 worth ₹1.57 lakh crore were completed by April 2026. 
• However, India still accounts for less than 1% of global shipbuilding output. China, South Korea and Japan dominate global production.
• India’s merchant fleet remains relatively small and foreign-flagged vessels carry a large proportion of its overseas cargo, resulting in substantial foreign-exchange outgo.

Why does Shipbuilding Matter?

• Strategic autonomy: Indigenous warships and auxiliary vessels reduce vulnerability to foreign supply disruptions.
• Trade security: Around 95% of India’s merchandise trade by volume moves through the maritime route.
• Industrial multiplier: Shipbuilding generates demand for steel, engines, electronics, design services and thousands of MSMEs.
• Employment: It is both labour- and skill-intensive and can generate extensive indirect employment.
• Foreign-exchange savings: Indian-built and Indian-flagged vessels can reduce dependence on overseas shipyards and shipping companies.
• Blue Economy: It supports coastal shipping, fisheries, offshore energy, cruises and marine services.
• Green transition: Demand for low-emission and alternative-fuel vessels creates a new market that India can enter before production patterns become entrenched.

India’s Advantages: 

• Long coastline and expanding port infrastructure
• Large engineering and skilled-workforce base
• Strong domestic steel and information-technology industries
• Experience in constructing aircraft carriers, stealth frigates, patrol vessels and specialised ships
• Lower labour costs and growing expertise in AI, simulation and digital ship design; and
• Saturated order books and capacity constraints in established shipbuilding countries.

Government Initiatives: 

• ₹69,725-crore maritime package: Approved in 2025 to improve financing, shipyard capacity, skills and regulatory conditions.
• Shipbuilding Financial Assistance Scheme: ₹24,736 crore, extended until March 2036; provides assistance of approximately 15-25% depending on vessel category.
• Maritime Development Fund: ₹25,000 crore, comprising:
  • ₹20,000-crore Maritime Investment Fund for equity financing; and
  • ₹5,000-crore Interest Incentivisation Fund to lower borrowing costs.
• Shipbuilding Development Scheme: ₹19,989 crore for greenfield and brownfield shipyards, clusters, infrastructure and technology.
• National Shipbuilding Mission: Provides coordinated implementation and policy direction.
• Customs incentives: Basic customs duty exemption on specified shipbuilding inputs has been extended for ten years.
• Sagarmala Programme: Promotes port modernisation, connectivity, port-led industrialisation and coastal community development. 

Major Challenges: 

• High capital costs, expensive credit and long vessel-construction cycles
• Limited scale and uncertain domestic order books
• Dependence on imported marine engines, propulsion systems and specialised components
• Cost disadvantages relative to subsidised Asian shipyards
• Delays in construction and weak after-sales and repair ecosystems
• Ageing merchant vessels and limited Indian-flag participation in EXIM trade
• Shortage of specialised design, welding and marine-engineering skills; and
• Need to comply with increasingly stringent global decarbonisation standards.

Way Forward: 

• India should create integrated maritime clusters connecting shipyards, component manufacturers, ports and research institutions
• Provide predictable orders to public and private shipyards
• Promote leasing and long-tenure finance
• Encourage joint ventures and technology transfer
• Specialise in green ships, offshore vessels, ferries and naval platforms.

India’s improved ports provide the logistical foundation, but becoming a maritime power requires simultaneous expansion of Indian ship ownership, domestic shipbuilding and repair capabilities. A competitive maritime ecosystem can advance economic growth, employment, export competitiveness and strategic autonomy.

PDF