Union Cabinet's Approval of the Shipbuilding Package
The Union Cabinet has approved a substantial package of ₹69,725 crore aimed at boosting India's shipbuilding and maritime sector. This initiative is structured around four key pillars:
- Strengthening domestic maritime capacity
- Enabling long-term financing
- Developing shipyards
- Building human capital
Significance and Strategic Advantages
India's geography positions it as a potential hub for trade and logistics, with 95% of its foreign trade by volume passing through maritime routes. Nevertheless, the shipbuilding industry in India has lagged behind global leaders due to fragmented policies and high costs.
Integrated Approach of the New Package
- Extension of the Shipbuilding Financial Assistance Scheme until 2036 with a corpus of ₹24,736 crore.
- Introduction of a Shipbreaking Credit Note worth ₹4,001 crore.
- Launch of a National Shipbuilding Mission to ensure continuity and accountability.
- Creation of a Maritime Development Fund with a corpus of ₹25,000 crore, including:
- Maritime Investment Fund
- Interest Incentivisation Fund
- Granting of infrastructure status to large commercial ships to enable access to long-term, low-cost financing.
Focus on Skilling and Environmental Standards
The package emphasizes skilling to meet modern shipbuilding demands, including precision engineering and adherence to International Maritime Organization regulations for energy efficiency and emission reduction. The global fleet's ageing and environmental norms are tightening, necessitating greener, smarter vessels.
Challenges and Opportunities
Indian shipyards face challenges like cost overruns and policy inconsistency. Successful implementation requires:
- Performance-tied incentives
- Modernization with clear benchmarks
- Transparent financing channels
- Private sector involvement in courting global orders and forming technology partnerships
Complementary measures, such as reducing logistics bottlenecks at ports, are crucial. If effective, the package could increase shipbuilding capacity, create nearly three million jobs, and attract investments of around ₹4.5 trillion. Beyond economics, it reinforces India’s national security and geopolitical resilience.