Three shipbuilding clusters to come up at ₹75,000 crore

Mint

15 hours ago

New Delhi: The Centre is looking at an investment of ₹75,000 crore in the three brand-new shipyards planned along its east and west coasts, as it targets to make India a global hub for shipbuilding. The investment will be made over four to five years, with the yards capable of making and repairing ships.
'The government is seeking to set up three greenfield shipbuilding clusters and support the existing shipyards carry out brownfield expansion. Overall, the government is targeting about ₹25,000 crore investment per greenfield cluster, which may be subject to significant changes based on the final locations and the shipyard sizes," the Union ports ministry said in response to a query.
Five states are in talks with local and foreign shipbuilders to pick the ideal locations to host the three facilities, the ministry said. One of the shipyards may also host a shipbreaking facility supplying material for shipbuilding.
'MoPSW is also finalizing schemes to support these clusters (greenfield). For the brownfield expansion of existing yards, there is a scheme under finalization to support the expansion efforts of all the yards," the ministry said. Greenfield manufacturing refers to facilities put up from scratch, while brownfield refers to the expansion of existing facilities.
The planned total amount of ₹75,000 is expected to come from both the Centre and companies.
Mint reported in July that Indian state-run firms were looking to tie up with global shipbuilders. Also, in September, Mint reported that India is looking to Japan and Korea for shipbuilding initiatives. Talks are on with Japanese and Korean shipbuilders for investments in Indian clusters, while existing public sector shipbuilders are separately negotiating with Korean firms for joint ventures.
Push for local
The shipyard push is part of the government's ambition to make ships of all sizes and build locally, and encourage Indian built, owned and flagged cargo ships. The country's share in global shipbuilding now remains below 1%. The government's projection is to raise the share of Indian built ships in India's fleet from 5% at present to 7% by 2030 and 69% by 2047.
Earlier, shipping secretary T.K. Ramachandran had told Mint that five locations in Andhra Pradesh, Odisha, Tamil Nadu, Gujarat and Maharashtra were being considered for developing shipbuilding clusters. It is expected that first three may come up in Tamil Nadu, Gujarat and Odisha, where identification and notification of land for the project has progressed swiftly. Special purpose vehicles have also been formed in these states and they have also commissioned techno economic feasibility report (TEFR) for the project.
Some of the sites have carried out initial viability assessments of the locations and the same is planned for other locations. The findings will be shared with shipbuilders, and they will be invited to invest in these clusters, the ministry said.
"A significant capital commitment under a public-private partnership model underpins the ambitious objective of becoming a leading shipbuilding power by 2047. While the challenge is massive, the opportunity is equally substantial," said Anshuman Magazine, chairman & CEO, India, South East Asia, Middle East & Africa, at CBRE, a global consulting firm.
India is a classic example of peninsular geography, with an extensive coastline spanning nine states, which provides a distinct competitive advantage in maritime logistics across the Arabian Sea, the Bay of Bengal, and the Indian Ocean, Magazine said. "The regional market, particularly the supply chains of emerging Southeast Asian economies, presents a huge opportunity for India to position itself as a reliable and cost-competitive alternative in the shipbuilding industry," he added.
Indian officials have visited traditional shipbuilding centres in Korea, Japan, and a few Scandinavian countries to explore partnerships and joint venture agreements. Over the next few months, some tie-ups between global shipbuilders and Indian private sector and state-owned companies are expected.
The FY26 budget proposed Maritime Development Fund, a ₹25,000 crore government-industry partnership that would help develop manufacturing clusters with focus on shipbuilding and breaking. The budget also proposed that the existing Shipbuilding Financial Assistance (SBF) policy will be revamped to address cost disadvantages while also providing Credit Notes for shipbreaking to help purchase indigenously build ships.
The budget has also included large ships in the infrastructure harmonized master list (HML) allowing purchase of ships on easier terms while providing basic customs duty exemption on raw materials, components, consumables or parts for the manufacture of ships extended for another ten years. Formal government notification for these programmes is still awaited.
As per Maritime Vision 2030 and Vision 2047 plan, government is targeting to make India among the top 10 and among top five shipbuilding and ship owning country's worldwide respectively. Overall investment of ₹3 to 3.5 lakh crore across ports, shipping, and inland waterways categories is targeted.
The shipbuilding initiative would also address a concern of the trade about the uncertainty and variability (escalation) of shipping cost impacting their market competitiveness. With better availability of domestic shipping lines at affordable prices, the freight rate volatility due to black swan events like covid-19, the Russia-Ukraine war, Red Sea crisis, Iran-Israel conflict, etc, could also be checked.