India is set to launch a landmark policy aimed at revitalizing its domestic shipbuilding industry, with a focus on green and technologically advanced vessels. The Ministry of Ports, Shipping, and Waterways (MoPSW) is finalizing a cabinet note outlining the program, which is poised to provide substantial subsidies and other incentives to local shipyards, Indian business newspaper Mint reports.
This initiative marks the second phase of the Shipbuilding Financial Assistance Policy (SBFAP), initially introduced in 2016 and set to expire in 2026. Under the first phase, 39 shipyards secured orders for 313 vessels, of which 135 have been delivered to date.
Major Highlights of the Policy
The government plans to allocate $2.1 billion for the program, which will include a 25% subsidy for specialized vessels and a 30% subsidy for green and highly advanced ships. These measures are aimed at making Indian shipyards competitive with their Chinese and South Korean counterparts.
In a bold move to encourage fleet renewal, the government is also proposing credit notes worth 40% of a ship’s scrap value. These notes could be redeemed against the cost of constructing new vessels at Indian shipyards, incentivizing the replacement of older vessels. Notably, 44% of India’s merchant fleet is over 20 years old, according to MoPSW data.
Additionally, a purchase preference policy is being considered for coastal cargo vessels beginning in fiscal year 2031. Under this provision, vessels seeking registration for coastal operations in India would be required to be built domestically.
Strategic Vision
The policy aligns with India’s Atmanirbhar Bharat (self-reliant India) vision, which prioritizes building domestic capacity across industries. The government aims to raise the percentage of India-built ships in its merchant fleet to 7% by 2030 and 69% by 2047.
Infrastructure status for the broader shipping sector is also under consideration, expanding beyond shipbuilding and shipyards. This change would enable shipping companies to float infrastructure bonds and secure additional investment avenues, significantly reducing project costs.
By targeting advancements in shipbuilding, India hopes to establish itself as a leading player in the global maritime sector while strengthening its domestic fleet and promoting sustainability.
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