India's Ship Building Industry

Despite significant investments through initiatives such as the Sagarmala Programme and the Maritime Development Fund (₹25,000 crore allocated in Budget 2025), the shipbuilding industry in India continues to struggle with underdevelopment.

The shipbuilding industry in India has witnessed remarkable growth in recent years. The sector's total valuation rose from $90 million in 2022 to $1.12 billion in 2024, demonstrating increasing investment and expansion. However, despite this progress, India continues to lag far behind global leaders such as China, South Korea, and Japan. While China commands over 50% of the global shipbuilding market, India ranks 20^th, holding a mere 0.06% share.

Strengthening the shipbuilding industry in India is crucial for multiple reasons, including economic growth, national security, and global trade competitiveness. With India's growing maritime trade and its ambition to position itself as a global manufacturing hub, developing a robust shipbuilding ecosystem is imperative. The government has introduced key policies and reforms, but significant challenges—ranging from financial constraints to outdated shipyard infrastructure—must be tackled.

Industry Valuation & Growth

• The shipbuilding industry in India has expanded considerably, growing from $90 million in 2022 to $1.12 billion in 2024.
• According to industry projections, the sector is expected to reach $8 billion by 2033, growing at a compound annual growth rate (CAGR) of 60%.

Shipbuilding Infrastructure

• India has a vast maritime network with 13 major ports and over 200 minor ports, facilitating the shipping industry.
• The country has around 30 shipyards, divided between the public and private sectors.

Major Public Sector Shipyards

• Cochin Shipyard Ltd. (CSL) – A key player in commercial and defense shipbuilding, known for projects like INS Vikrant.
• Hindustan Shipyard Ltd. (HSL) – Primarily focuses on defense contracts and submarine refits.
• Garden Reach Shipbuilders & Engineers (GRSE) – Specializes in warships and naval vessels.
• Mazagon Dock Shipbuilders Ltd. (MDL) – India’s leading warship manufacturer, currently executing Project 75 for Scorpene-class submarines.

Major Private Sector Shipyards

• L&T Shipbuilding – A crucial player in defense shipbuilding, manufacturing patrol vessels and submarines.
• Reliance Naval & Engineering Ltd. (RNEL) – Focuses on commercial and defense shipbuilding but has faced financial challenges.

• Shipbuilding Financial Assistance Policy (2016-2026): This policy offers financial aid of up to 20% to domestic shipbuilders, encouraging local vessel production. Its goal is to boost India's global standing in shipbuilding and minimize dependence on imported ships.

• Sagarmala Programme: Aimed at port modernization and improving coastal shipping, this initiative enhances efficiency in maritime trade. It focuses on cutting logistics expenses while bolstering India's port infrastructure and shipbuilding industry.

• Atmanirbhar Bharat in Shipbuilding: This initiative promotes self-sufficiency by supporting the domestic construction of ships and naval vessels. The successful development of INS Vikrant at Cochin Shipyard Ltd. exemplifies India's shipbuilding progress.

• PM Gati Shakti Initiative: A comprehensive infrastructure initiative that enhances multimodal connectivity to strengthen the shipping sector. It streamlines logistics operations, ensuring smoother transportation across ports, roads, and rail networks.

• Maritime India Vision 2030: This vision aims to position India as a major global player by advancing its maritime and shipbuilding capabilities. With structured policy reforms, India strives to rank among the world's top 10 shipbuilding nations by 2030.

Economic Growth and Global Market Expansion

• Investing in shipbuilding creates a multiplier effect, boosting manufacturing, employment, and allied industries like steel and electronics.
• A strong domestic shipbuilding sector reduces reliance on foreign-built vessels and enhances India’s exports.
• The industry has grown from $90 million in 2022 to $1.12 billion in 2024, with a projected increase to $8 billion by 2033 at a CAGR of 60%.
• Maritime India Vision 2030 aims to place India among the top 10 shipbuilding nations by 2030, strengthening its role in global trade.

Strategic and Defense Preparedness

• A robust shipbuilding sector is vital for national security, enabling the indigenous construction of warships, submarines, and patrol vessels.
• Strengthening domestic manufacturing aligns with the Atmanirbhar Bharat initiative, reducing reliance on foreign defense imports.
• Under Project 75, six Scorpene-class (Kalvari-class) submarines have been indigenously built at Mazagon Dock Shipbuilders Limited, Mumbai.
• Enhancing indigenous shipbuilding capabilities will improve maritime defense preparedness and lower procurement costs for naval vessels.

Supporting the Blue Economy and Coastal Development

• Shipbuilding is a key pillar of India's Blue Economy, supporting fisheries, port development, and marine tourism.
• A developed shipbuilding industry will enhance inland and coastal shipping, reducing logistics costs and road-rail congestion.
• Strengthening shipbuilding will facilitate deep-sea exploration for minerals and hydrocarbons, bolstering India’s energy security.
• The Blue Economy contributes approximately 4% to India’s GDP, and the Sagarmala Program focuses on port-led growth and waterway expansion.

Promoting Green and Sustainable Shipbuilding

• Aligning with India’s Net Zero 2070 commitment, the shipbuilding industry must transition toward low-emission, fuel-efficient vessels.
• Investments in green hydrogen-powered and electric vessels will help India comply with International Maritime Organization (IMO) emission norms.
• Developing green shipyards will strengthen India’s standing in sustainable shipping and eco-friendly vessel production.
• The Cochin Shipyard launched India’s first hydrogen fuel-powered ferry in 2024, marking progress under the Green Hydrogen Mission.

Enhancing India’s Role in Global Maritime Supply Chains

• Strengthening domestic shipbuilding will position India as a competitive player in global maritime supply chains.
• Reducing dependence on East Asian countries for ship manufacturing, repair, and leasing will boost India's self-sufficiency.
• Aligning with global supply chain diversification trends will attract foreign direct investment (FDI) in maritime manufacturing.
• Expanding shipbuilding capacity will help India establish itself as a preferred hub for ship production and maintenance.

Lack of a Competitive Shipbuilding Ecosystem

• India’s shipbuilding industry faces long construction timelines and inconsistent quality standards, making Indian-built ships less competitive in global markets.
• Unlike leading shipbuilding nations like China, South Korea, and Japan, India lacks an integrated maritime cluster with shipyards, component suppliers, and advanced R&D facilities in close proximity.
• Bureaucratic hurdles and delays in project execution further reduce efficiency and competitiveness.
• India ranks 20^th in global shipbuilding with only a 0.06% market share, while China alone holds over 50%.
• The annual shipbuilding output of Indian shipyards is only 0.072 million GT, which must increase to 0.33 million GT by 2030 to meet Maritime India Vision (MIV) 2030 targets.

High Capital Costs and Lack of Financing

• Shipbuilding is a capital-intensive industry requiring significant upfront investment in shipyards, machinery, and skilled labor.
• Indian shipbuilders struggle to access low-cost financing, unlike their global competitors who receive strong state-backed financial support.
• The absence of long-term shipbuilding credit facilities and a dedicated maritime financing institution hampers the industry's competitiveness.
• China provides heavy subsidies and imposes restrictions on foreign competitors, making it difficult for non-Chinese shipbuilders to access global markets.
• Indian shipyards, in contrast, rely on expensive commercial bank loans, increasing their financial burden.

Heavy Dependence on Imported Raw Materials and Components

• Indian shipbuilders rely on foreign suppliers for critical components like marine-grade steel, navigation systems, and propulsion equipment, leading to high costs and supply chain vulnerabilities.
• Despite efforts under Make in India, domestic manufacturing of shipbuilding components remains weak, making India reliant on imports.
• While India’s imports of ships, boats, and floating structures declined, they still stood at USD 479.60 million in 2023, indicating continued reliance on foreign-built vessels.

Infrastructure Bottlenecks and Lack of Modern Shipyards

• Indian shipyards are smaller and less automated than global leaders, leading to higher production costs and longer construction times.
• Many government shipyards operate with outdated machinery and inadequate dry docks, limiting their capacity to build larger vessels.
• Port congestion and inefficient logistics further add to supply chain disruptions in shipbuilding.
• Cochin Shipyard’s largest dry dock is only 310m in length, whereas China’s Shanghai Waigaoqiao Shipyard has one of the world's largest dry docks, allowing it to construct mega-ships.

Absence of a Strong Domestic Market for Shipbuilding

• Unlike China, which has a high domestic demand for new vessels, India’s shipping companies often purchase second-hand foreign ships rather than ordering new ones from Indian shipyards.
• High costs, longer delivery timelines, and lack of financing options make Indian-built ships less attractive to domestic buyers.
• The absence of a strong domestic order book prevents Indian shipyards from scaling up production and reducing costs through economies of scale.

Weak Repair and Maintenance Ecosystem

• Despite having a growing merchant navy and defense fleet, India’s ship repair and maintenance (MRO) industry remains underdeveloped.
• India holds less than a 1% share in the global ship repair market, as many Indian shipowners prefer sending vessels to Singapore, China, or the UAE for repairs due to lower costs and better quality.
• The lack of state-of-the-art dry docks and repair infrastructure restricts India’s ability to capture the lucrative ship repair and maintenance market.

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Strengthening Domestic Manufacturing of Shipbuilding Components

• Reducing dependence on imported marine-grade steel, propulsion systems, and navigation equipment is crucial to making Indian-built ships cost-competitive.
• The Production Linked Incentive (PLI) scheme for advanced manufacturing can be expanded to cover key shipbuilding components, encouraging domestic production.
• Integrating Make in India with the Sagarmala Program can help create dedicated maritime industrial zones near ports, supporting local manufacturing.
• A Phased Manufacturing Program (PMP) can be introduced to boost indigenization in a structured manner, reducing reliance on foreign suppliers.

Establishing a Dedicated Shipbuilding Finance System

• A dedicated Shipbuilding and Maritime Financing Institution under the Public-Private Partnership (PPP) model can provide low-interest loans, export credit, and ship leasing options.
• Linking this financing system to the National Infrastructure Pipeline (NIP) can ensure structured funding for shipbuilders.
• A Shipbuilding Export Promotion Fund can help Indian shipyards compete globally by offering credit at concessional rates, reducing financial barriers.

Revamping and Expanding Existing Shipyard Infrastructure

• Fast-tracking the Development of Enterprise and Service Hubs (DESH) Bill 2022 can facilitate the creation of Maritime Special Economic Zones (SEZs), providing shipbuilders with world-class logistics, technology access, and tax benefits.
• Existing public-sector shipyards like Cochin Shipyard, Mazagon Dock, and Hindustan Shipyard should be modernized under the PPP model, inviting global expertise and investment.
• The inclusion of ships in the infrastructure category, as recommended by the Rangarajan Commission, can boost investment and ease financing constraints.

Creating Sustained Domestic Demand for Indian-Built Ships

• The Inland Waterways Authority of India (IWAI) and the Ministry of Ports should adopt a Buy Indian Policy, ensuring that future government and defense ship orders are placed with Indian shipyards, similar to the Positive Indigenisation List of the Ministry of Defence.
• Linking the PM Gati Shakti initiative with shipbuilding can stimulate demand for cargo vessels, passenger ferries, and coastal transport ships.

Integrating Shipbuilding with Renewable Energy and Green Shipping

• To align with India’s Net Zero 2070 goals, the shipbuilding sector must transition towards low-emission, green hydrogen-powered, and electric vessels.
• The National Green Hydrogen Mission should be integrated with shipbuilding to develop hydrogen-powered ships and associated fueling infrastructure.
• Expanding the PLI scheme for battery storage and electric mobility can promote the production of electric-powered inland and coastal vessels, reducing reliance on diesel-powered ships.

Developing a Maritime Cluster for Research, Innovation, and Skill Development

• A National Maritime Innovation Hub should be established under Maritime India Vision 2030, fostering collaboration between startups, defense R&D, and private shipbuilders for smart ships, AI-based navigation, and modular ship designs.
• Integrating the Skill India Program with shipbuilding training institutes can ensure a steady supply of skilled workers, strengthening the labor force in the sector.

Strengthening India’s Position in Global Shipbuilding Supply Chains

• Leveraging Free Trade Agreements (FTAs) with ASEAN, the US, and other key economies can position India as an export hub for ships and maritime equipment.
• Establishing co-production agreements with leading global shipbuilders like Hyundai, Mitsubishi, and Daewoo can help India acquire advanced shipbuilding technology and expertise.

Reducing Bureaucratic Delays and Improving Ease of Doing Business

• Establishing a Single-Window Clearance System for shipbuilding approvals can streamline regulatory processes, simplify tax structures, and fast-track project execution.
• Harmonizing tax incentives across states will attract investments and prevent policy inconsistencies that discourage private sector participation.

Which city is famous for ship building in India?

• Kochi in Kerala is famous for ship building in India.

What are the 13 major ports in India?

• The following are the 13 major ports in India: Chennai, Kochi (Cochin), Ennore, Kolkata (Haldia), Kandla, Mangalore, Mormugao, Mumbai Port Trust, Jawaharlal Nehru Port Trust (JNPT), Vadhavan Port, Paradip, Tuticorin, Visakhapatnam

What is the specialty of Chennai port?

• It is an artificial port & India's second largest container port. It is the largest port in Bay of Bengal.

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