In today’s Finshots, we tell you why India is keen on building more ships and what it could mean for the economy, sectors, and you.

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The Story

If you’re not a ship owner, the shipping industry might feel a little distant. But here’s why you should care. India ranks 18th globally for shipping capacity, yet we’re heavily dependent on foreign companies for shipbuilding, shipping insurance and transportation.¹

Think about it. 95% of India’s trade by volume and 70% by value moves by sea.² But India controls just a measly 0.07% of the global shipbuilding market.³ Meanwhile, China, South Korea and Japan dominate with over 90% of it.

And this dependence doesn’t come cheap. For context, India paid $75 billion (over ₹6 lakh crores) to foreign shipping companies for sea freight in FY23 alone. That’s a huge outflow of money!

Then there’s another issue. Globally, our share in ship ownership is a tiny 1.2%, and less than 1% of ships operate under an Indian registration. Compare that to Greece, China and Japan, which together own nearly 40% of the world’s carrying capacity, and you can see how far we’re lagging.

And that’s exactly what the government wants to change.

It knows that India’s shipbuilding industry struggles because financers are hesitant to fund it. A ship usually lasts about 25-30 years, and returns on investment take ages to show up. This makes it tough for shipbuilders to get the capital they need.

On top of that, ships aren’t classified as infrastructure, which means that long-term financing options from domestic or foreign sources are hard to come by.

But the government sees a huge opportunity here. If Indian shipyards can meet future shipping demands, it could unlock a ₹20 lakh crore market by 2047.⁴ So, it’s charting a course to boost the industry and put Indian companies in the driver’s seat.

The big focus? Building more ships right here at home.

The goal is ambitious ― move India from its current 20th spot in shipbuilding and repairs to the top 10 by 2030 and crack the top 5 by 2047.⁴ It’s all part of Maritime India Vision 2030 and Amrit Kaal Vision 2047.

So, how does the government plan to pull this off, you ask?

First up, it’s trying to fix the money problem. It plans to set up a ₹30,000 crore Maritime Development Fund (MDF) to kick things off.⁵ The idea is simple. Create a fund with a chunk of finance from the government and the rest from private investors and public sector companies to make financing easier and cheaper, hopefully attracting more players. Plus, it’s putting up a credit note scheme that will offer shipowners incentives to scrap their old ships and build new ones in domestic shipyards.

Second, ports. Last year, the government announced an investment of up to ₹1.25 lakh crores to upgrade India’s ports.⁶ The plan was to cut wait times, boost cargo handling and improve connectivity. Because better ports mean better support for shipyards and by improving them, the government hopes to make shipbuilding smoother and more efficient.

Third, partnerships. India wants to work with the best in the game — South Korea and Japan.⁷ Each of these countries brings something unique — cutting-edge shipyards, high-quality builds and expertise in green shipping tech. Collaborating with them, by building shipbuilding clusters, and seeking investments brings in new technologies and best practices.

All these efforts could help Indian shipyards build more ships locally, grow our fleet and compete globally, all while keeping money within the country and boosting the economy. It also means better security since reducing our dependence on foreign shipowners makes us less vulnerable if the global supply chain hits a snag.

And companies are already taking notice.

The Indian Navy is working on building new submarines and using more environmentally friendly practices. India’s major shipbuilders like Mazagon Dock Shipbuilders Limited (MDL) and Cochin Shipyard Limited (CSL) are already setting a good foundation for the maritime industry. The Adani Group has also announced a big shipbuilding project at Mundra Port in Gujarat, with plans to invest ₹45,000 crores. This project, which started in 2024, aims to make India a major player in shipbuilding. And since global shipyards are fully booked until 2028, Adani wants to take advantage of the growing demand for eco-friendly ships, aiming for a $62 billion (₹5.2 lakh crores) market by 2047.

So yeah, India’s shipbuilding ambitions are huge. But can we actually get there?

Well, that’s the hard part because while the government has tackled the industry’s biggest hurdle — access to capital — there’s still a big wave to navigate. And that is, how will shipbuilders make the most of this funding?

See, building ships is no easy feat. It demands a ton of working capital or to put things in perspective, about 20–25% of a ship’s construction cost.⁸ Sure, the government’s funding plans help with this, but scaling up still could feel risky without production-linked incentives (PLIs) like the ones that boosted electronics manufacturing.

And here’s the catch. The shipping industry was hoping for a PLI scheme for shipbuilding components and sea vessels in this year’s Budget, but there hasn’t been much chatter about it since the FY25 Budget rolled out. Without that, closing the viability gap to make shipbuilding a thriving industry seems harder than ever.

And that simply tells us that India still has a long way to go. Shipbuilding needs to be recognised as essential infrastructure to make financing easier. But that’s not enough. We need to close the gaps and tie up all the loose ends if we want to break into the top 10 by the end of this decade. And for that, we need to act fast.

For now, all we can do is keep our fingers crossed and hope that India’s shipbuilding dream stays on course.

Until then...

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Story Sources: PIB [1] [2] [4], Financial Express [3], Economic Times [5], Swarajya [6], Business Standard [7], KPMG [8]

Note: An earlier version of this article misstated the sea freight payment figure. It has now been corrected to reflect that India paid over ₹6 lakh crores (₹6,300 billion) to foreign shipping companies for sea freight in FY23, instead of ₹600 crore. We regret the oversight.

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