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November 3, 2025Can India break the global shipbuilding monopoly of China, Korea, and Japan?
For a nation that once ruled the seas with ancient docks like Lothal, it is ironic that India builds less than 0.06% of the world’s ships in 2025
The Union Cabinet has approved a Rs 69,725 crore package to revitalise India’s shipbuilding sector, a defining moment for the nation’s economic and strategic future, in a significant move to reclaim its maritime legacy. The strategy aims to establish India as a global hub for ship manufacturing, repair, and maritime innovation. This initiative is more than just a fiscal stimulus; it is a blueprint designed to position India among the top global shipbuilding countries. The package is projected to unlock 4.5 million Gross Tonnage (GT) capacity, generate nearly 30 lakh jobs, and attract ₹4.5 lakh crore in investment, advancing the Aatmanirbhar Bharat vision. The Shipbuilding Financial Assistance Scheme (SBFAS) is extended until March 2036 with a corpus of ₹24,736 crore that provides long-term, predictable support. A Maritime Development Fund (MDF) of ₹25,000 crore aims to attract more private capital by 2030.
India’s current standing in global shipbuilding is tenuous, ranking 19th to 22nd with a market share of less than 1%. In the interim, the global market is controlled by giants such as China, South Korea, and Japan, which collectively control an astonishing 93% of the market. This global dominance is not solely due to the presence of large shipyards; it is a testament to the fully integrated national ecosystems. For instance, China’s shipbuilding capacity is astoundingly superior. This figure is estimated to be 884 times greater than that of India. This gap exists because Indian shipyards face costs 25-30% higher than their competitors.. The shipbuilding industry in India faces numerous challenges, including an inconsistent policy environment, high capital costs, a shortage of skilled labour, and outdated infrastructure. The expansion of private shipyards is impeded by financial and regulatory constraints, while public sector shipyards frequently encounter bureaucratic impediments. The shipbuilding industry’s expansion, job creation, and trade security necessitate this urgent package of assistance.
Indian shipyards need to improve their scale and technical capacity, while the supply chain for advanced components remains import dependent. The supply chain for ship components, including high-grade steel and propulsion systems, remains import heavy. In addition to these concerns are environmental pressures. The global maritime sector is transitioning rapidly toward green shipping with international mandates on emissions. Therefore, it is crucial to establish a robust innovation ecosystem.
The path to global shipbuilding dominance requires creating dense, localised maritime clusters along our extensive coastline, replicating the comprehensive networks seen in Korea and Norway. Shipbuilding is often called the “mother of heavy engineering”, requiring a robust network of ancillary units. Currently, the lack of strong ancillary industries means Indian shipyards must heavily import crucial components like propulsion systems and machinery from Europe, Japan, and the U.S. This reliance drastically increases repair costs and leads to turnaround times 1.4 to 1.6 times longer than global yards. India needs MSMEs and dedicated steel-making units that cater to the high-grade material demands of the maritime sector, drawing lessons from South Korea’s model of supporting ancillary industries through R&D and incentives. All these units must be located within the local vicinity of the larger shipbuilding ecosystem surrounding the shipyards.
Crucially, this ecosystem must be anchored by strong knowledge institutions. India currently boasts the third-largest number of maritime education institutions globally. Yet, many of these educational and research institutions operate independently, with minimal industry collaboration, leading to a shortage of technological advancement and low knowledge sharing. For example, Kochi Shipyard is surrounded by a plethora of educational institutions that specialise in naval architecture, fisheries, and maritime security, while Gujarat has institutions that focus on maritime law and finance. The government should promote the involvement of the private sector in nearly every aspect, as it is a capital-intensive and hybrid ecosystem that requires nurturing. It is imperative to establish a Maritime Innovation Fund to facilitate the development of digital ship designs, research and development, and green technologies. Skilling programmes under Skill India should be expanded to include marine engineering, ship design, and retrofitting for environmental compliance.
The Cabinet’s shipbuilding package attempts to correct the existing imbalances with a targeted and multi-layered strategy. Additionally, the objective is to establish a maritime industrial value chain. By providing direct financial incentives to domestic shipyards, the package aims to neutralise the cost disadvantages Indian firms face compared to their global competitors. Shipbuilding has a lengthy gestation period, which means that the returns are not immediate. The designation of shipbuilding as an infrastructure sector will increase long-term investment flows, while credit assurance mechanisms will make financing large orders more feasible. The package is in accordance with the nation’s flagship initiatives, such as Sagarmala, which is intended to modernise ports and establish connections with manufacturing hubs, and PM Gati Shakti, which focusses on the development of multimodal infrastructure. In general, the sector will create millions of employment opportunities and significantly stimulate the local and national economies.
A historic opportunity to fortify India’s shipbuilding sector and align it with the demands of the 21st century is presented by the Union Cabinet’s shipbuilding package.. We must act swiftly and decisively to seize this momentum, not just to build ships but to build a maritime nation.
The article was originally published in the Deccan Herald.
Dr D Dhanuraj is the Founder-Chairman and Dr Dhritishree Bordalai is a Senior Research Associate (International Relations) at the Centre for Public Policy (CPPR), Kochi, Kerala, India.
Views expressed by the authors are personal and need not reflect or represent the views of the Centre for Public Policy Research (CPPR).
Dr Dhanuraj is the Chairman of CPPR. His core areas of expertise are in international relations, urbanisation, urban transport & infrastructure, education, health, livelihood, law, and election analysis. He can be contacted by email at [email protected] or on Twitter @dhanuraj.
Dr Dhritishree Bordalai holds a PhD from the Centre for European Studies (CES), School of International Studies (SIS), Jawaharlal Nehru University (JNU), New Delhi. She has a Certificate in Public Policy and Management from the Indian Institute of Management, Kozhikode (IIM-K), and has been awarded the UGC-DAAD Short-Term Scholarship during her PhD at the Otto-Suhr-Institut für Politikwissenschaft (OSI), Freie Universität Berlin, Germany.
She has attended several national and international conferences on her area of research and presented a paper at the Young Researchers Conference in JNU. Her core areas of research are migration, security and refugee studies.
