Union Cabinet Approves ₹69,725 Crore Package to Revive India’s Shipbuilding Sector

26 Sep 2025 , 10:16 AM

The Union Cabinet on Wednesday approved a ₹69,725 crore package to boost India’s shipbuilding sector, aiming to revive the country’s maritime strength and reduce heavy reliance on foreign shipping.

The package is anchored on a four-pillar strategy expanding domestic shipbuilding capacity, creating long-term financing channels, supporting shipyard development, and driving reforms in policy, taxation and skilling. The government said the move will create a robust maritime ecosystem and position India as a major shipbuilding nation by 2047.

As part of the plan, the Shipbuilding Financial Assistance Scheme (SBFAS) has been extended till March 31, 2036, with a ₹24,736 crore allocation. The scheme also introduces a Shipbreaking Credit Note with a budget of ₹4,001 crore. A National Shipbuilding Mission will be set up to coordinate all initiatives.

A new Maritime Development Fund (MDF), with a ₹25,000 crore corpus, has also been cleared to provide long-term financing support. This includes a Maritime Investment Fund of ₹20,000 crore (with 49% government participation) and an Interest Incentivisation Fund of ₹5,000 crore to ease borrowing costs.

Additionally, the Shipbuilding Development Scheme (SbDS), with an outlay of ₹19,989 crore, seeks to scale India’s shipbuilding capacity to 4.5 million gross tonnage annually, build mega shipbuilding clusters, expand infrastructure, and launch the India Ship Technology Centre under the Indian Maritime University. It also provides risk coverage, including insurance support, for shipbuilding projects.

Prime Minister Narendra Modi recently highlighted the urgency of reducing India’s dependency on foreign shipping, noting that the country pays nearly $75 billion (₹6 lakh crore) annually to overseas companies for shipping services. “Till 50 years ago, about 40% of our trade was carried by ships made in India. Today, that figure has fallen to just 5%,” he had said.

The government has also granted infrastructure status to large ships built in India. Commercial vessels of 10,000 gross tonnage or more, under Indian ownership and flag, now qualify for the benefit. Similarly, vessels above 1,500 gross tonnage, if built domestically and owned under the Indian flag, will also be eligible.

Union Minister for Ports, Shipping and Waterways Sarbananda Sonowal hailed the Cabinet’s decision, calling it a historic milestone. “This is a giant leap towards Aatmanirbhar Shipping and our aim of becoming a Top 5 shipbuilding nation by 2047,” he said in a post on X.

Shipbuilding, often described as the “mother of heavy engineering,” is seen not only as an economic driver but also as vital to national security, energy resilience, and strategic independence. India’s maritime sector already handles 95% of the nation’s trade by volume and 70% by value, underscoring its critical role in the economy.

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