Historical Context and Current State of Indian Shipbuilding

Nearly a decade after the Partition, the Archaeological Survey of India discovered the world's oldest known dock at Lothal, Gujarat, dating back to the Harappan era. Despite this rich maritime history, India currently contributes only 0.06% to global shipbuilding and controls a mere 5% of its maritime tonnage. The country significantly relies on foreign ships, with only 1,500 large ships serving 1.4 billion people.

Economic and Strategic Implications

India paid $109 billion in sea freight to foreign operators in 2021-22 and faced challenges from international price volatility and geopolitical tensions. The Indian shipbuilding industry primarily focuses on defense, with major players like Cochin Shipyard and Hindustan Shipyard. The Maritime Amrit Kaal Vision 2047 aims for a Rs 80 trillion investment to propel India among the top five maritime nations by 2047.

Government Initiatives and International Collaboration

The Central government is emphasizing the development of domestic commercial maritime capacity, spanning shipping, shipbuilding, maritime finance, and marine insurance. Notably, South Korea's major shipbuilders have shown interest in Indian shipbuilding projects, with discussions facilitated by government delegations.

Challenges in Meeting Global Shipbuilding Demands

Experts highlight India's need to increase annual shipbuilding output by 157 times to meet its 2047 goals. The country's current fleet is outdated, with a significant number of ships over 20 years old. Comparatively, developed nations have a much younger fleet.

• The government proposes demand generation measures like mandatory Indian-built coastal vessels by 2030.
• There's a proposal for a shipbreaking credit note scheme, akin to the vehicle scrappage scheme.

Financial Challenges and Proposed Solutions

The sector demands access to low-cost finance due to high working capital requirements. Interest rates in India are much higher compared to major shipbuilding nations. The government is contemplating including ships in the harmonized master list of infrastructure sectors to facilitate easier access to finance.

• Establishment of the Maritime Development Fund and NBFC approval for Sagarmala Development Corporation.
• Proposals for tax breaks on ship components, customs duty exemptions, and interest subvention on capital expenditure.

Outlook and Industry Response

While the government has announced several supportive measures, there is a call for sustained support to foster a robust shipbuilding ecosystem. The industry anticipates growth in shipyards, with investments focusing on modernizing facilities and expanding capacity, particularly emphasizing green technologies.