‘If there’s a good time, it is now’: Former shipping secretary on India’s shipbuilding push

What does India’s planned “ecosystem approach” to shipbuilding include?

India’s planned ecosystem approach treats shipbuilding as a complete industrial network. It addresses both demand and supply, because shipyards need reliable orders as well as land, equipment, skills, finance and technology. The goal is to help Indian yards expand capacity and compete globally.

The government is aggregating demand by identifying orders for more than 100 vessels over two years. It is also addressing the cost difference between Indian construction and overseas purchases. The Maritime Development Fund offers equity support, while an interest incentive provides up to 3% interest subvention. Shipping has also received infrastructure status, enabling longer loans.

The approach includes a technology centre for research, design and testing. It also supports domestic ship ownership, vessel replacement, green shipping and ship recycling. Together, these measures are intended to make projects more viable, attract private and international investment, and build lasting domestic capability.

How large is the government’s support, and how many vessels is it trying to generate demand for?

India’s support package totals ₹ 70,000 crore and is designed to strengthen the maritime sector over a 10-year period. T K Ramachandran described the package, alongside five new laws, as a turning point for shipbuilding and related activities. Its purpose is to remove financial and demand barriers that have limited Indian yards.

A major demand measure is the identification of more than 100 vessels needed over the following two years. This aggregation gives shipyards clearer order visibility. It can help them plan investment, expand facilities and build confidence before committing large sums to new capacity.

The package is broader than vessel orders. It includes equity through the Maritime Development Fund, interest support of up to 3%, infrastructure status for shipping and incentives linked to domestic construction and recycling. These measures are intended to draw private capital and international interest into India’s maritime ecosystem.

Why have Indian shipyards struggled to expand capacity and attract orders in the past?

Indian shipyards struggled because demand and supply problems reinforced each other. Without dependable orders, yards had little reason to invest heavily in facilities, equipment or skills. Without expanded and efficient capacity, they found it harder to win large orders. This limited India’s ability to compete with established overseas shipbuilding markets.

The government also identified a cost gap between building ships in India and buying them abroad. Higher domestic costs can discourage owners from choosing Indian yards. Limited access to suitable finance added another obstacle, especially for projects requiring substantial investment and long repayment periods.

The new strategy is meant to break this cycle. Demand aggregation offers greater visibility, while financing support and infrastructure status lower funding pressure. Technology, design and testing support should strengthen capabilities. The government said India ranked around 16th globally during the discussion, showing the distance still to cover.

How do longer loan tenures, interest subsidies and equity support make shipbuilding projects more financially viable?

Shipbuilding projects require large upfront spending and may take years to recover their costs. Short loans and high interest can make repayments too heavy during construction and early operation. Longer financing periods spread those repayments across more years, improving project cash flow and reducing financial strain.

Infrastructure status for shipping is central to this change. Ramachandran said earlier loan tenures were about five, six or seven years, but could now reach 25 years. The Maritime Development Fund adds equity support, so businesses do not need to fund the entire project through debt. An interest incentive can provide up to 3% subvention.

Together, these tools can lower borrowing costs, reduce repayment pressure and improve project viability. That may encourage private investors to finance yards, vessels and related infrastructure. The intended result is greater capacity, more domestic ownership and stronger participation across the maritime sector.

Who is expected to participate in India’s maritime push, and how could international companies such as MSC benefit from it?

India’s maritime push is designed for broad participation. Government agencies provide laws, demand support and financial schemes. Shipyards can expand capacity, while shipping companies and domestic owners can place orders. Private investors, lenders, technology developers and businesses across shipping, ports and waterways can also take part.

International companies may benefit from a more predictable and financially supported market. MSC, identified in the article as a major international company, has already placed shipbuilding orders in India. Firms ordering vessels could gain access to developing local capacity, financing support and incentives tied to domestic construction and recycling.

The strategy also seeks to make India more attractive for long-term maritime investment. Infrastructure status can enable longer loans, while the technology centre can improve design and testing. If these measures deliver stronger yards and reliable suppliers, international orders could help deepen India’s shipbuilding ecosystem and create further demand.

Besides building new green ships, what other sources of growth could India’s maritime industry pursue?

Green shipping is only one part of India’s potential maritime growth. The government also sees demand from ageing vessels that will need replacement. Ship recycling can create another stream of industrial activity. Domestic manufacturing offers a further opportunity by supplying equipment and capabilities needed across the sector.

One incentive links recycling to new construction. When a ship is recycled in India, 40% of its value can be claimed as a credit, subject to conditions, if the ship is built domestically. This mechanism connects recycling activity with orders for Indian-built vessels. It could encourage owners to choose both Indian recycling facilities and local shipyards.

These opportunities broaden the market beyond new green ships. Replacement demand can provide recurring orders, while recycling and manufacturing can support related businesses. Alongside finance, technology and infrastructure measures, they could help Indian yards expand and attract international customers over time.

Why is shipbuilding a capital-intensive industry, and why does access to long-term financing matter for a country’s industrial and trading power?

Shipbuilding is capital-intensive because it requires expensive yards, specialised equipment, large vessels, engineering, design and testing before a project earns returns. Construction can also involve long timelines and substantial working capital. These costs make financing conditions central to whether a shipyard can expand or accept major orders.

Long-term loans spread repayment across the useful life of a vessel or facility. India’s infrastructure status for shipping raises possible loan tenures from about five to seven years to as long as 25 years. Equity support reduces reliance on debt, while interest subvention lowers financing costs. Together, they improve cash flow and project viability.

For a country, stronger shipbuilding can support domestic manufacturing, shipping ownership and maritime infrastructure. It can also reduce dependence on overseas procurement and help serve trade with domestically built vessels. The article links these reforms to greater private investment and broader industrial capability.

Key Facts:

📌 The strategy addresses both demand and supply sides.

📌 Demand aggregation could provide orders for more than 100 vessels.

📌 A technology centre will support research, design and testing.

📌 The government announced a ₹ 70,000-crore package.

📌 The package is designed to operate over 10 years.

📌 Demand was identified for more than 100 vessels over two years.

📌 Shipyards lacked predictable orders and long-term visibility.