India’s Big Shipbuilding Push: From 0.06% Towards 5% of Global Output by 2030

India is steadily working to build a strong presence in the global shipbuilding industry by improving its competitiveness, focusing on exports, and deepening its integration with international markets. The country is investing in modern infrastructure, upgrading domestic manufacturing capabilities, and encouraging private sector participation. Through policy support and strategic initiatives, India aims to capture 5% share of the global shipbuilding market by 2030.

In June 2024, the Author had published an article that had highlighted India’s potential to become one of the world’s top shipbuilding nations in the next decade, and discussed some of the measures the Indian government had been undertaking until then to foster self-reliance in the shipbuilding sector, and for the overall development of the country’s maritime sector.

Most importantly, the article discussed the state of India’s shipbuilding sector at the time and pointed out that despite the country’s potential to become one of the top shipbuilders in the world, it has a long road to travel.

For instance, India’s market share in global shipbuilding is said to be at around 0.06% currently, which is significantly lower than Vietnam’s 1.01% that ranks fourth in terms of its market share in global shipbuilding, let alone the top three countries sharing 95% of the global shipbuilding output which include China – 54.57%, South Korea – 28.02%, and Japan – 12.56%.

That said, it must also be acknowledged that India’s ambitions are not all talk, and that there have been some substantive measures undertaken by the Indian government which have yielded results for the country in its shipbuilding sector.

For example, at the end of the Financial Year (FY) 2022-23, India’s total shipbuilding output, both from public and private sector, was 0.042 million Gross Tonnage (or 42,000 GT), and in the two years since, it is said to have reached up to around 0.072 million GT (or 72,000 GT), representing approximately 71.4% increase, which is a strong growth rate for a capital-intensive industry like shipbuilding even if it is from a relatively low base.

Therefore, it becomes important to discuss the current state of India’s shipbuilding sector to gauge its growth trajectory in the coming years, given the immense potential this sector holds for India’s broad-based industrial growth as well as maritime power projection through enhanced naval capability that will enable sustained sea control, secure trade routes, and stronger geopolitical influence across strategically vital ocean regions.

So, let us begin.

Current State Of Indian Shipping And Shipbuilding

India’s commercial shipping and shipbuilding sector, while still trailing the rapid expansion of the country’s trade—spanning growing energy imports and refined petroleum exports—is witnessing strong momentum and scaling up swiftly, reflecting a determined push to expand domestic capacity and progressively reduce reliance on foreign shipping lines.

Seaborne transport remains the backbone of India’s external trade, accounting for nearly 95% of total volume and roughly 70% of value. Yet, as per a report by the National Productivity Council and KPMG, only around 8% of this trade in 2018 was handled by Indian-flagged or domestically owned vessels.

More recently, this share has seen a notable increase. By 2025, approximately 20% of India’s trade cargo is being transported by Indian-flagged or Indian-owned ships, according to remarks by India’s Minister of Petroleum and Natural Gas, Hardeep Singh Puri, at a conference held in Mumbai during India Maritime Week 2025.

This rise in the share of Indian-flagged or Indian-owned vessels has been driven mainly by the acquisition of ships built abroad and increased re-flagging.

To encourage this rise further, in 2025, the Indian government introduced the Maritime Development Fund (MDF) to strengthen India’s maritime sector by offering financial support through equity and debt instruments.

The fund has begun with a corpus of IN₹ 25,000 crore and is expected to scale up to IN₹ 70,000 crore. The equity component of this fund, called the Maritime Investment Fund, comprises IN₹ 20,000 and is intended to support 49% contribution from the government, with the rest meant to come from major port authorities, other government bodies, central public sector enterprises (PSEs), financial institutions, and the private sector.

While the debt component of the fund, called the Interest Incentivisation Fund, has IN₹ 5,000 crore, and is meant to provide interest subvention of up to 3 percentage points on loans to shipowners, shipyards and port developers. It operates through banks, lowering borrowing costs for capital-intensive maritime projects and improving their viability.

By 2030, the Maritime Development Fund is projected to catalyse investments of up to IN₹ 1.5 lakh crore in the shipping sector.

Now, let us get to the state of domestic shipbuilding. Going by the latest statistics put out by the Ministry of Ports, Shipping & Waterways (MoPSW), India has 53 shipyards, of which 9 are in the public sector, with 7 of them under the Central Government, 2 under State Governments and 44 under the private sector.

This is a significant increase from the 42 shipyards at the end of 2023, wherein 35 were under the private sector and 7 in the public sector, with six of them under the Central Government and 1 under a State Government.

At present, Indian shipyards are primarily engaged in building small to mid-sized vessels, typically below 20,000 Deadweight Tonnage (DWT), with offshore support vessels and general cargo ships forming a substantial share of output. While their overall order books and operational scale remain modest relative to global leaders, Indian yards have secured a distinct position in select segments, most notably in general cargo vessels, where they account for around 10% of global order volumes.

As discussed earlier, the Indian government has been implementing several measures to ramp up the shipbuilding sector in the country.

The first notable measure among them was the Shipbuilding Financial Assistance (SBFA) approved in 2015, which offered financial support to Indian shipyards up to 20 per cent of the lower of contract price, fair price or actual payments received of each vessel built and delivered by them within three years, or six years in the case of specialised vessels.

Originally, the SBFA was meant to be valid for ten years from 2016 to 2026. The scheme has since been significantly scaled up and reworked. Its tenure has been extended from the original 2026 deadline to 2036, with the financial outlay expanded to roughly IN₹ 24,000–25,000 crore, underscoring a stronger, long-term policy push for shipbuilding.

The earlier flat subsidy of up to 20% has been replaced with a graded incentive structure of about 20-30%, with higher support directed towards specialised and green vessels.

More specifically, this graded structure includes unspecified higher financial assistance for wind farm installation vessels and sophisticated dredgers, 20% financial assistance for vessels with electric means of propulsion or vessels fitted with a hybrid propulsion system, and 30% financial assistance for vessels where main propulsion is achieved by means of green fuels such as Methanol/ Ammonia / Hydrogen fuel cells.

Another addition is a ship recycling-linked credit mechanism, which allows shipowners scrapping vessels in India to claim credits of up to 40% of the scrap value, redeemable against fresh orders at domestic yards. The scheme has also been made more flexible, enabling alignment with other government programmes and extending eligibility to a wider range of vessels, including export orders.

Taking cognisance of the strategic importance of shipyards, they were granted infrastructure status in 2016, enabling access to flexible long-term project loans, lower interest rates from Infrastructure Funds, relaxed External Commercial Borrowings (ECB) norms, and infrastructure bond issuance for working capital needs.

The Pradhan Mantri Matsya Sampada Yojana (PMMSY) also has provisions in the form of the Standard Operating Procedures for Chartering of Tugs and Procurement of Deep-Sea Fishing Vessels, which aim to promote small and medium shipyards.

To realise the vision of ‘Atma Nirbhar’ or self-reliance and to promote tonnage under the Indian flag and ship-building in India, the government revised the criteria for granting the Right of First Refusal (ROFR) in chartering vessels, as part of which, preference is given to vessels that are Indian-built, Indian-flagged, and Indian-owned.

Moreover, the Public Procurement policy, as revised in 2020, dissuades government Ministries or departments from issuing global tender enquiries for public procurement of goods and services below the value of INR 200 crores, which also supports domestic shipyards.

One of the major factors behind soaring costs in Indian shipbuilding is the taxes and duties levied on input material used in shipbuilding, and therefore, to bring down the cost disparity faced by Indian shipyards and encourage the growth of indigenous shipbuilding, the Indian government has exempted customs and central excise duties on material used in shipbuilding.

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