Cabinet clears Rs 69,725 crore package to boost shipbuilding, maritime sector

• The Union Cabinet, chaired by Prime Minister Narendra Modi, approved a comprehensive package of Rs 69,725 crore to revitalise India’s shipbuilding and maritime ecosystem. 

The package has four pillars:

Pillar I: The Shipbuilding Financial Assistance Scheme (SBFAS) will be extended until March 31, 2036, with a total corpus of Rs 24,736 crore. It aims to incentivise shipbuilding in India and includes a Shipbreaking Credit Note with an allocation of Rs 4,001 crore. A National Shipbuilding Mission will be established to oversee the implementation of all initiatives.

Pillar II: The Maritime Development Fund (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 with 49 per cent participation from the government of India and an Interest Incentivisation Fund of Rs 5,000 crore to reduce the effective cost of debt and improve project bankability.

Pillar III: The Shipbuilding Development Scheme (SbDS), with a budgetary outlay of Rs 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.

Pillar IV: Policy reforms including taxation and ecosystem reforms. 

The package is designed to:

i) Strengthen domestic capacity.

ii) Improve long-term financing.

iii) Promote greenfield and brownfield shipyard development.

iv) Enhance technical capabilities and skilling.

v) Implement legal, taxation, and policy reforms to create a robust maritime infrastructure. 

Significance of this package

• International shipping transports more than 80 per cent of global trade to peoples and communities all over the world. 

• Shipping is the most efficient and cost-effective method of international transportation for most goods. 

• It provides a dependable, low-cost means of transporting goods globally, facilitating commerce and helping to create prosperity among nations and peoples.

• India has a long and illustrious maritime history, with centuries of trade and seafaring that connected the subcontinent to the world.

• The maritime sector remains a backbone of the Indian economy, supporting nearly 95 per cent of the nation's trade by volume and 70 per cent by value.

• At its core lies shipbuilding, often described as the “mother of heavy engineering”, which not only contributes significantly to employment and investment but also enhances national security, strategic independence, and the resilience of trade and energy supply chains.

• India holds 0.06 per cent of the total global shipbuilding market and is ranked 20th in the industry, but aims to break into the top ten ranking by 2030 and top five by 2047.

• 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.

• Beyond its economic impact, the initiative will strengthen national, energy, and food security by bringing resilience to critical supply chains and maritime routes.

• It will reinforce India’s geopolitical resilience and strategic self-reliance, and position India as a competitive force in global shipping and shipbuilding.

(The author is a trainer for Civil Services aspirants.)