Shipping Industry in India- Explained Pointwise
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The Indian shipping industry is a cornerstone of the nation’s economy. With a coastline spanning 7,517 km, India stands as the 16th largest maritime nation globally. However, despite substantial economic growth and investments in port infrastructure, the shipping and shipbuilding industry has struggled to achieve its full potential. The Union Budget 2025-26 aims to address these challenges with significant financial and policy interventions, setting the stage for India’s emergence as a global maritime power.

Shipping Industry in India
Source- Economic Times
Table of Content
What is the current status of India’s Shipping Industry?
What are the key announcements for the Shipping Industry in the Budget 2025-26?
What are the other government initiatives for Maritime growth?
Why is Investment in Maritime Infrastructure Crucial for India?
What are the challenges in India’s Maritime and Shipbuilding Sector?
What should be the future roadmap & policy recommendations?

What is the current status of India’s Shipping Industry?

Trade handled by Maritime Sector95% by volume and 70% by value of India’s trade is managed.
Market share of exported shipsIndia is a leading exporter of shipping vessels with a 33% market share (Economic Survey 2024).
Share in Global shipbuilding and Ship ownershipIndia has a tiny presence in the global shipbuilding market, with just 0.07% share, and owns only about 1.2% of the world’s ships.
Ship Recycling3rd largest ship recycling by tonnage with 30% global market share in shipbreaking with the world’s largest ship-breaking facility located in Alang
Port Infrastructure13 major ports and 200+ notified minor & intermediate ports.

What are the key announcements for the Shipping Industry in the Budget 2025-26?

1. Maritime Development Fund: A Rs. 25,000 crore fund has been established to provide long-term financing and enhance global competitiveness. However, only 49% of this fund will come from the government, with the rest dependent on major ports, raising concerns about its sustainability.

2. Financial Assistance Policy: This includes credit incentives for shipbreaking and an extension of the tonnage tax scheme to inland vessels.

3. Basic Customs Duty Exemptions: A 10-year extension on duty exemptions for raw materials, components, and consumables will reduce shipbuilding costs.

4. Infrastructure Status for Large Ships: This move will lower financing costs by up to 10 percentage points.

5. Special Economic Zones (SEZs) & International Financial Centres (IFSCs): Incentives for ship leasing, insurance, and treasury centers at GIFT City, Gujarat, will attract global players.

What are the other government initiatives for Maritime growth?

1. Maritime India Vision (MIV) 2030– MIV 2030 outlines 150 initiatives for port-led development, shipping modernization, and inland water transport expansion, positioning India as a global maritime leader.

2. Sagarmala Program (2015)– The program aims to harness India’s coastline and waterways to improve logistics efficiency. It has achieved high project completion rates in:

  • Port modernization and industrialization
  • Port connectivity enhancement
  • Coastal shipping and inland water transport development
  • Community development in coastal regions

3. Green Tug Transition Program (GTTP)- This initiative aims to replace conventional fuel-powered harbor tugs with environmentally friendly tugs by 2040.

Why is Investment in Maritime Infrastructure Crucial for India?

Economic Security & Trade Resiliencea. Red Sea Crisis Impact: Houthi attacks have disrupted global shipping routes, increasing costs and delays.
b. Dependence on Foreign Ships: India relies on foreign vessels for 95% of its international cargo, leading to high freight costs.
c. Geopolitical Risks: Supply chain disruptions from global conflicts highlight India’s limited domestic shipping capacity.
d. Forex Savings: Strengthening domestic maritime infrastructure can reduce forex outflows and enhance trade security.
Strategic Positioning in Indo-Pacifica. IMEC Initiative: The India-Middle East-Europe Economic Corridor (IMEC) aims to counter China’s Maritime Silk Road.
b. SAGAR Vision: Strengthening maritime infrastructure enhances India’s leadership in regional maritime security.
Employment Generation & Skill Developmenta. Seafarer Contribution: India ranks third globally in seafarer supply, contributing 10% of the global maritime workforce. Growth in shipbuilding and port operations can generate thousands of skilled and semi-skilled jobs.
b. Sagarmala Programme: This initiative has already generated significant employment, with millions more jobs projected through port-led development projects.
Promotes Environmental Sustainability a. COP28 Commitments: Maritime infrastructure modernization aligns with India’s climate goals and green shipping initiatives. For exHarit Sagar Initiative.
b. IMO’s Net-Zero Target: The International Maritime Organization’s 2050 net-zero emissions strategy makes green shipping infrastructure crucial.

What are the challenges in India’s Maritime and Shipbuilding Sector?

1. Financing & Infrastructure Constraints: Ships are not classified as infrastructure, limiting financing options, despite shipyards having infrastructure status since 2016. Also, the SARFAESI Act 2002 prevents banks from offering long-term loans, as ships cannot be mortgaged.

2. Lack of Port Infrastructure & Lower Operational Efficiency: Indian ports handled 1.4 billion tonnes of cargo (2022-23) but lag in efficiency. Depth limitations at major ports restrict ultra-large container vessels, increasing dependency on transshipment hubs in other countries.

3. Skilled Workforce Deficit & Technology Gaps: India supplies 10-12% of global seafarers but faces a shortage of specialized shipbuilding skills.

4. Regulatory & Policy Outrage: Port expansion and maritime infrastructure projects face 2–3-year approval delays due to land acquisition and Coastal Regulation Zone compliance.

5. Lower Performance in Global Competition & Market Positioning: China dominates 46.6% of global shipbuilding, creating high entry barriers for India. Indian shipyards operate at 60-70% capacity, limiting economies of scale and global competitiveness.

6. Slow Coastal Shipping Development: Despite 7,500 km of coastline, coastal shipping accounts for only 6% of domestic freight movement. Lack of dedicated freight corridors raises logistics costs by 15-20%.

What should be the future roadmap & policy recommendations?

1. Strengthening Domestic Shipbuilding:
a. Create a National Shipbuilding Mission with direct financial support.
b. Introduce a Production-Linked Incentive (PLI) scheme for shipbuilding.
c. Improve access to long-term financing at concessional rates. For example, South Korea’s Korea Ocean Business Corporation (KOBC) provides low-cost financing to domestic shipbuilders, helping them dominate global markets.

2. Enhancing Indian Shipping Competitiveness:
a. Provide tax incentives to Indian shipowners to increase fleet size.
b. Reintroduce the Cargo Reservation Policy to increase the share of Indian-flagged vessels in EXIM trade.
c. Reduce taxes on ship leasing and ship financing.

3. Boosting Coastal Shipping & Inland Waterways:
a. Improve last-mile connectivity between ports and industrial hubs.
b. Expand multimodal logistics hubs under PM Gati Shakti.
c. Incentivize ferry and roll-on/roll-off (RoRo) services.

4. Enhancing Port Infrastructure & Operational Efficiency:
a. Develop ultra-large container vessel (ULCV)-friendly ports to reduce transshipment dependency on hubs like Singapore and Colombo.
b. Invest in automation, blockchain, IoT, and AI for faster port operations. For example, Jebel Ali Port (UAE) operates with AI-driven efficiency, reducing ship turnaround times to just 4-6 hours.

5. Green Shipping & Sustainability Initiatives: Invest in hydrogen-powered ships, LNG bunkering facilities, and solar-powered port operations. For example, Norway’s electric ferry fleet has drastically reduced maritime emissions.

6. Public-Private Partnerships (PPP): Encourage foreign investment in shipbuilding and port development. For example, Singapore’s PSA Port Expansion through PPPs has made it a global transshipment hub.

Conclusion

The Union Budget 2025-26 has set the foundation for India’s maritime resurgence. Long-term reforms focusing on tax rationalization, financial support, and regulatory simplifications will be crucial in achieving India’s $2 trillion export target by 2030. A strong maritime industry will not only enhance economic security but also position India as a global maritime leader in the coming decades.

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