Mentor’s Comment

The Government’s announcement of a ₹69,725 crore package to revive India’s shipbuilding ecosystem marks a crucial moment for maritime infrastructure. With India building only a handful of merchant ships in the last decade despite global growth, the new push signals both opportunity and urgency. The challenge lies in transforming policy incentives into real competitiveness, something India failed to do under the 2015 package.

Introduction

India aspires to emerge as a global maritime power, but its shipbuilding sector has lagged far behind peers like China, Japan, and South Korea. While lucrative defence contracts have kept select shipyards active, India’s merchant ship production remains negligible. The new package seeks to expand capacity to 4.5 million gross tonnage, modernise yards, and create ancillary clusters. However, unless structural inefficiencies are addressed, ranging from delays in turnaround to absence of long-term offtake, the initiative risks becoming another missed opportunity.

Why in the News

The government has announced a massive ₹69,725 crore revival package to replace the expiring 2015 shipbuilding scheme. This is significant because, despite subsidies earlier, India produced only about half-a-dozen merchant ships in 10 years, a glaring failure when global yards deliver ships in just a year. The new plan aims to overcome these bottlenecks by upgrading infrastructure, ancillaries, and financing structures. The contrast between global efficiency (3–4 months keel to launch) and India’s 2–3 years turnaround highlights the magnitude of the problem.

The Scale of the Problem

1. Negligible merchant shipbuilding: Only half-a-dozen small ships built in the last decade.
2. Long delays: Turnaround time of 2–3 years in India vs 1 year globally.
3. Lack of competitiveness: Shipowners avoid Indian yards due to sunk capital and overruns.

Global Best Practices in Shipbuilding

1. Korea, Japan, China lead: Prefabricated component blocks welded in large assembly-line yards.
2. High-capacity cranes: 1,000-tonne cranes enable block movement in foreign shipyards.
3. Speed & efficiency: Keel-to-waterborne in 3–4 months; full build in about 1 year.

India’s Bottlenecks

1. Inadequate infrastructure: Indian yards too small, lack crane capacity and prefab space.
2. Weak ancillary ecosystem: Absence of robust component manufacturing clusters.
3. Finance limitations: Benefits of lower interest rates & extended repayment apply only to large vessels.

Missed Opportunities in Policy Integration

1. Green fuel projects: Kakinada & Kochi developing production for exports but no linkage with green shipbuilding.
2. Lack of long-term offtake: Shipowners lack demand visibility; without assured contracts, newbuild investments stall.

The Way Forward

1. Cluster-based development: Establish ancillary industries around shipyards for supply chains.
2. Capacity building: Training institutions on lines of China to create skilled manpower.
3. Policy synergy: Link green shipping contracts with renewable fuel policies.
4. Long-term contracts: Use State-owned utilities and oil companies’ chartering needs to guarantee orders.

Conclusion

India stands at a decisive moment. A robust maritime ecosystem can secure energy lifelines, generate employment, and project India’s presence as a global power. The ₹69,725 crore package is promising, but unless structural inefficiencies, ancillary gaps, and demand visibility issues are resolved, it risks going the way of the failed 2015 policy. Success lies not merely in incentives but in creating a seamless ecosystem of infrastructure, skills, finance, and guaranteed demand.

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