India’s Union Budget 2025-26 A Major Boost For Shipbuilding Industry

The Union Budget 2025-26 has unveiled significant financial support for India’s shipbuilding industry, marking a strategic push towards enhancing its global competitiveness. Key announcements include:

• $2.8 billion Maritime Development Fund to support the national shipping industry.
• Extension of the Shipbuilding Financial Assistance Policy, injecting $2.2 billion into the sector.
• Incentives for shipowners, including a credit note worth 40% of a scrapped ship’s value, redeemable for newbuilds in Indian shipyards.
• Discussions with major liner groups to promote the use of Indian shipyards for shipbuilding and repairs.

India’s Current Shipbuilding Landscape

Despite being a maritime nation, India holds less than 1% of the global shipbuilding market. Its shipyards mainly build small to medium vessels (under 20,000 dwt), with over 1,350 vessels constructed domestically.

• The largest vessel ever built in India was a 93,322 dwt Aframax tanker (Cochin Shipyard, 2002).
• Since 2006, Indian yards have delivered 8 Panamax, 5 Supramax, and 13 Handysize dry cargo vessels.
• Current order book: 96 vessels (460k dwt), dominated by General Cargo ships (60%).

Challenges & Opportunities

India’s shipbuilding sector lags behind global leaders like China, South Korea, and Japan, which together account for 90% of new ship orders. Key challenges include:

• Limited capacity for large vessel construction.
• Lack of advanced technology and skilled workforce.
• Financing constraints due to limited long-term credit facilities.

However, India has several advantages that could drive future growth:

• Strategic location & low labour costs.
• Government support & funding initiatives.
• Expertise in niche segments (e.g., General Cargo, Offshore, and Multi-Purpose Vessels (MPPs)).

Path Forward: Niche Growth & Future Expansion

With an aging global fleet, India’s focus on small to mid-sized vessels could provide a stepping stone to larger projects in the future.

• 40% of India’s fleet was built domestically.
• Aging fleet renewal opportunities: Over 35% of MPPs and 20% of AHTS vessels are over 25 years old.
• The largest vessel under construction is a 19,100 dwt TSH Dredger (€104 million) at Cochin Shipyard.

While becoming a top-tier shipbuilding nation by 2030 remains ambitious, a targeted approach—leveraging niche markets and government support—could make India a formidable player in the global shipbuilding and repair industry.