Cabinet clears Rs 69,725 crore shipbuilding and maritime development package

By Admin

25 Sep, 2025

In a landmark move to revitalise India’s maritime economy, the Union Cabinet has approved a sweeping reform package worth Rs 69,725 crore. The initiative aims to strengthen the shipbuilding industry, modernise maritime infrastructure, and position India as a global hub for shipbuilding, repair, and allied services.

Announcing the decision, Union Minister Ashwini Vaishnaw said the reforms are designed to generate massive employment, attract large-scale investments, and enhance India’s strategic resilience. “This initiative will not only expand our maritime capacity but also reinforce our position as a competitive force in global shipping and shipbuilding,” Vaishnaw noted.

A four-pillar reform strategy

The package is anchored on a structural four-pillar strategy that goes beyond financial outlays:

• Domestic Capacity and Infrastructure – Strengthening existing shipyards, developing new facilities, and scaling up gross tonnage capacity.
  
  

• Long-Term Financing – Establishing dedicated funds to support capital-intensive shipbuilding projects.
  
  

• Greenfield and Brownfield Development – Supporting new investments while modernising older shipyards.
  
  

• Skill Development and Technology – Setting up centres of excellence, training programmes, and technology transfer for the workforce.
  
  

Extension of the Shipbuilding Financial Assistance Scheme (SBFAS)

One of the centrepieces of the package is the extension of the Shipbuilding Financial Assistance Scheme (SBFAS) until March 31, 2036, with an allocation of Rs 24,736 crore. This will continue to incentivise domestic shipbuilders by offering financial support linked to contracts secured in India.

A unique addition under SBFAS is the Shipbreaking Credit Note, carrying an allocation of Rs 4,001 crore. This will encourage responsible ship recycling, strengthening India’s global leadership in shipbreaking.

Launch of the National Shipbuilding Mission

To ensure seamless coordination, the government will establish a National Shipbuilding Mission, an apex body to oversee programme implementation, monitor progress, and align policy measures with industry needs.

Maritime Development Fund (MDF)

The Cabinet has approved the creation of a Maritime Development Fund (MDF) with a corpus of Rs 25,000 crore, comprising two components:

• Maritime Investment Fund – Rs 20,000 crore, with 49% participation by the Government of India to catalyse private investment.
  
  

• Interest Incentivisation Fund – Rs 5,000 crore, aimed at lowering borrowing costs and improving project viability.
  
  

Shipbuilding Development Scheme (SbDS)

Another major reform is the launch of the Shipbuilding Development Scheme (SbDS), with a budgetary outlay of Rs 19,989 crore. The scheme aims to expand India’s shipbuilding capacity to 4.5 million gross tonnage annually, placing the nation among the world’s top shipbuilding countries.

Key features of SbDS include:

• Financing of mega shipbuilding clusters and infrastructure upgrades.
  
  

• Creation of the India Ship Technology Centre at the Indian Maritime University for research, innovation, and training.
  
  

• Risk coverage and insurance support to reduce financial risks for investors.
  
  

Economic and strategic impact

The government expects this package to unlock 4.5 million gross tonnage of new capacity, attract Rs 4.5 lakh crore in investments, and generate nearly 30 lakh direct and indirect jobs.

Beyond economics, the reforms carry strategic importance. By strengthening shipbuilding and maritime logistics, India can enhance its national, energy, and food security while making global supply chains more resilient.

Maritime sector: A backbone of India’s trade

India’s maritime sector remains central to its economy, with nearly 95% of trade by volume and 70% by value transported by sea. Yet, India’s global shipbuilding share is modest compared to leaders like China, South Korea, and Japan.

This package aims to bridge that gap by promoting indigenous shipbuilding capacity and boosting India’s competitiveness in both commercial and defence segments.

Towards a maritime renaissance

The approval of this Rs 69,725 crore package marks the beginning of a maritime renaissance for India. By blending financial support, modern infrastructure, skill-building, and strategic reforms, the initiative is poised to transform India into a maritime powerhouse.

If implemented effectively, the reforms will strengthen trade, bolster strategic autonomy, and create millions of opportunities across the maritime value chain ushering India closer to its vision of becoming a global shipbuilding hub.