Why in news?
In September 2025, the Union Cabinet approved a ₹69,725‑crore package to revitalise India’s shipbuilding industry. The comprehensive plan extends financial assistance to 2036, sets up dedicated funds and reforms shipyard development.
Background
- India’s share of global shipbuilding is less than 1%, and domestic shipyards face high capital costs and global competition. Previous schemes, like the 2016 Shipbuilding Financial Assistance Scheme, provided partial support but ended in 2024.
- Reviving shipbuilding is crucial for the blue economy, maritime security and Make in India initiatives. It also reduces reliance on foreign shipyards for defence and merchant vessels.
The four pillars
- Shipbuilding Financial Assistance Scheme (SBFAS): Extended till 2036, this scheme subsidises a portion of the contract price of vessels built by Indian shipyards, offsetting cost disadvantages compared to foreign yards.
- Maritime Development Fund (MDF): A ₹25,000‑crore fund with two components – the Maritime Investment Fund to provide long‑term, low‑cost loans for shipowners and shipyard infrastructure, and the Interest Subsidy Fund to lower interest rates on loans.
- Shipbuilding Development Scheme: With an outlay of ₹19,989 crore, this scheme supports building and expanding shipyards, creating clusters, funding innovation and providing viability gap funding for greenfield projects.
- National Shipbuilding Mission & Reforms: A mission‑style programme to coordinate all schemes, reform regulations, develop a skilled workforce and digitise shipbuilding processes. It aims to integrate Sagarmala, Gati Shakti and other maritime initiatives.
Significance
- The package aims to expand India’s share of the global order book and create more than one lakh direct and indirect jobs.
- Domestic shipbuilding reduces foreign exchange outflow and enhances national security by ensuring availability of defence and cargo vessels.
- The funding mechanism and long‑term perspective are expected to attract private investment and technology partnerships.
Challenges
- Shipbuilding remains capital‑intensive, and Indian yards need to upgrade design, digital and manufacturing capabilities to compete globally.
- Supply chain constraints and regulatory hurdles must be addressed quickly to ensure the schemes translate into orders.
Conclusion
A holistic four‑pillar approach provides financial incentives, infrastructure and institutional reforms to turn India into a shipbuilding hub. Implementation and monitoring will determine its success.
