Modi govt plans three shipbuilding clusters at the cost of 75,000 crore on east and west coasts of India, discussions between domestic and foreign companies underway
The Modi government has been taking concerted effort to develop India into a prominent maritime hub for shipbuilding. The centre is now considering investing ₹75,000 crore in the three new shipyards that are expected to be built along its east and west coasts, in a yet another significant step in this direction, reported Mint. The yards would be able to build and fix ships after the investment which is spread out over four to five years.
The union ports ministry informed, “The government is seeking to set up three greenfield shipbuilding clusters and support the existing shipyards carry out brownfield expansion. Overall, the government is targeting about ₹25,000 crore investment per greenfield cluster, which may be subject to significant changes based on the final locations and the shipyard sizes.”
According to the government, five states are negotiating with domestic and international shipbuilders to determine the best sites for the facilities. A shipbreaking plant might also be located at one of the shipyards, providing materials for production. “MoPSW (Ministry of Ports, Shipping, and Waterways) is also finalizing schemes to support these clusters (greenfield). For the brownfield expansion of existing yards, there is a scheme under finalization to support the expansion efforts of all the yards,” the ministry conveyed.
Greenfield manufacturing signifies the creation of facilities entirely anew, in contrast, brownfield relates to the development of current structures. The anticipated total sum of ₹75,000 is projected to be sourced from central government and multiple firms. Indian state-run companies had been seeking to collaborate with international shipbuilders and were looking to Korea and Japan for shipbuilding projects.
While current public sector shipbuilders are independently negotiating joint partnerships with Korean companies, discussions are underway with Japanese and Korean shipbuilders regarding participation in Indian clusters.
Massive boost to “Make in India”
The shipbuilding initiative is part of the government’s strategy to manufacture ships of all sizes domestically and to foster the development of cargo ships that are built, owned, and flagged in India. At present, the country’s share in the global shipbuilding market is below 1%. The government aims to increase the proportion of Indian-built ships in the national fleet from the current 5% to 7% by 2030 and to staggering 69% by 2047.
According to shipping secretary T.K. Ramachandran, five potential sites in Andhra Pradesh, Odisha, Tamil Nadu, Gujarat and Maharashtra are being evaluated for the creation of shipbuilding clusters. Tamil Nadu, Gujarat and Odisha have been selected for the first three where land identification and notification for the project has been completed swiftly. These states have also formed special purpose vehicles and commissioned a techno-economic feasibility report (TEFR) for the same.
Initial viability studies have been conducted at a few of the sites and more are about to follow. According to the ministry, shipbuilders would be informed of the results and asked to invest in there. Anshuman Magazine expressed, “A significant capital commitment under a public-private partnership model underpins the ambitious objective of becoming a leading shipbuilding power by 2047. While the challenge is massive, the opportunity is equally substantial.”
He is the chairman & CEO, India, South East Asia, Middle East & Africa, at CBRE (Global Commercial Real Estate Services), a global consulting firm. Magazine futher noted, “India is a classic example of peninsular geography, with an extensive coastline spanning nine states, which provides a distinct competitive advantage in maritime logistics across the Arabian Sea, the Bay of Bengal and the Indian Ocean.”
He added, “The regional market, particularly the supply chains of emerging Southeast Asian economies, presents a huge opportunity for India to position itself as a reliable and cost-competitive alternative in the shipbuilding industry.”
Significant efforts underway
Indian authorities have visited traditional shipbuilding sites in Korea, Japan, and a few Scandinavian countries to discuss collaboration and joint ventures. Some partnerships between international shipbuilders and Indian state-owned and private sector businesses will likely be announced during the coming months.
The Maritime Development Fund, a ₹25,000 crore government-industry cooperation, was proposed in the FY26 budget to support the growth of manufacturing clusters with an emphasis on shipbuilding and breaking. Additionally, the budget suggested that the current Shipbuilding Financial Assistance (SBF) policy be redesigned to alleviate cost disadvantages and offer shipbreaking Credit Notes to assist in the purchase of ships built domestically.
Large ships have also been included to the infrastructure harmonised master list (HML) by the budget which makes it easier to buy ships. Moreover, it extends the baseline customs duty exemption for a further ten years on raw materials, components, consumables, or parts used in shipbuilding. The official government announcement is pending for these programs.
According to the government’s Maritime Vision 2030 and Vision 2047 plans, India intends to be among the top 10 and top 5 shipbuilding and ship-owning nations in the world, respectively. The goal is to invest between ₹3 to ₹3.5 lakh crore in ports, shipping and interior waterways.
The shipbuilding program would also address the trade’s fear that their competitiveness in the market will be impacted by the unpredictability and escalation of shipping costs. The volatility of freight rates brought on by black swan events including Covid-19, the Russia-Ukraine war, the Red Sea crisis, the Iran-Israel conflict, among others might also be reduced with the improvement of availability of domestic shipping lines at reasonable rates.
Steering through the challenges
India is presently positioned 22nd in the worldwide shipbuilding sector. Meanwhile, China and South Korea today hold a dominant position in the global shipbuilding industry. China constructed over half of all merchant ships in the world in 2023, with a gross tonnage of (33 million GT) meaning that 51% of all merchant ships built in the globe that year were built in the country. According to reports, 62% of shipbuilding orders worldwide are placed in China.
India has been investigating collaborations with South Korea and Japan to address the challenge posed by China in a methodical and careful manner. India is also attempting to reduce its reliance on foreign ships through expanding its capacity to construct ships natively. It should be mentioned that India only owns 2% of the world’s maritime tonnage, while spending over $75 billion a year on ship leasing.
Notably, one of the biggest obstacles facing India’s shipbuilding sector has been funding. The usual lifespan of a ship is between 25 and 30 years, therefore making money is a long-term endeavour. Hence, the Modi administration chose to implement the much-needed legislative change after realising the difficulties the Indian shipbuilding industry has been suffering.
Notable announcements in the union budget
Union Finance Minister Nirmala Sitharaman declared in the budget 2025-2026 that ships of a certain size will be included into the harmonised master list of infrastructure which would qualify them for financial incentives. In addition to improving fleet modernisation, this will draw private investment to the shipbuilding sector.
A Maritime Development Fund (MDF) with a corpus of 25,000 crore was also launched. Long-term funding for the nation’s marine sector, especially ship acquisition, would be made possible this amount. The central government will contribute up to 49% of the corpus with the remaining portion coming from the private sector, port authorities, other government agencies, central PSEs and financial institutions.
New massive shipbuilding clusters around the nation were also revealed in the budget. Direct financial assistance shall be given to the shipbuilders in the form of capital dredging and breakwater construction. If not offered at a low cost, this plan also suggested a 10-year rent holiday for the land.
Likewise, the central government disclosed that the investment is intended to facilitate the development of trunk infrastructure, including utilities, roads, and sewage treatment, among other things.
The Shipbuilding Financial Assistance Policy (SBFAP) 2.0 which seeks to give Indian shipyards direct financial assistance was extended in the budget. With the Shipbreaking Credit Note program, ship scrapping will be encouraged by issuing a credit note worth 40% of the scrap value which can be refunded for the purchase of new “Made in India” ships.
The development of skilled workers in the shipbuilding industry was another priority for the central government. The budget set aside particular monies for human resource development and training in this sector, striving to capitalise on India’s standing as a global leader in maritime human capital.
The funding allocated for Shipbuilding Capability Development Centres (SCDC) is intended to support the testing and assessment of shipping projects as well as the creation of novel ship design and technical solutions.
8 mega shipbuilding clusters
OpIndia previously reported how the plans to establish eight massive shipbuilding and repair clusters along India’s coastline have been revealed by the Modi administration, in July. The project is at the heart of India’s Aatmanirbhar Bharat and Maritime Amrit Kaal Vision 2047. It intends to directly challenge China, South Korea and Japan’s supremacy in the $220 billion global shipbuilding market by placing the country among the top five shipbuilding powers in the world by 2047.
Five greenfield hubs in Andhra Pradesh, Odisha, Tamil Nadu, Gujarat and Maharashtra are included in the plan. These hubs are intended to serve as integrated ecosystems for the manufacture of ships, equipment, and related services. These are complemented by three brownfield expansions that concentrate on large vessel construction and specialised ship repair at Vadinar and Kandla in Gujarat and Cochin in Kerala.
The state governments have established Special Purpose Vehicles (SPVs) to expedite development and land with statutory approvals and road-rail connectivity has been secured. With an objective of ₹1.5 lakh crore ($18 billion) in sectoral investments by 2030, the Union Budget 2025-2026 created a ₹25,000 crore ($3 billion) Maritime Devlopment Fund to finance ship acquisition and infrastructure.
₹18,090 crore ($2.2 billion) is set aside for subsidies under the updated Shipbuilding Financial Assistance Policy (SBFAP 2.0) which includes 30% support for ecologically conscious vessels. It is anticipated that granting large ships infrastructure status will result in a 20–25% reduction in capital expenditures.
The project’s scope is exemplified by a flagship ₹57,000 crore investment at Kandla Port that includes a VLCC shipyard for 320,000-ton oil carriers. India is establishing strategic international alliances to close technological disparities. HD Hyundai of South Korea is completing a ₹10,000 crore joint venture for container ships with Cochin Shipyard in Tamil Nadu.
While Japanese corporations Imabari and Mitsubishi are being courted for green hybrid vessel projects in Andhra Pradesh, European partners like Denmark’s Maersk and Norway’s Kongsberg Maritime are pushing projects in smart ports and green shipping.
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