Government unwraps $8 billion outlay to transform India’s maritime sector

India is setting sail on its biggest maritime bet yet, with the Union cabinet on Wednesday unveiling an incentive package of ₹69,725 crore or about $8 billion for the shipping and ports industry.

The move seeks to turbocharge infrastructure that would attract investments in shipbuilding, repairs and breaking, while also promoting domestic ship ownership and enhancing port infrastructure. Along the way, the government hopes to add millions of jobs and anchor India firmly in global shipping lanes.

The broader goal is to catapult India from its current 16th rank in global shipbuilding into the top 10 by 2030—and the top five by 2047.

Briefing mediapersons after the cabinet meeting, Union information and broadcasting minister Ashwini Vaishnaw said the package for shipping is part of an overall ₹95,000-crore outlay that also covers railways, highways, human resource development and medical education.

Vaishnaw said the maritime reforms aim to upgrade the sector to global benchmarks while creating 3 million additional jobs and bringing in investment of ₹4.5 trillion.

He added that the reforms would also support 4.5 million gross tonnes of shipbuilding capacity, which has the potential to reach 8.2 million gross tonnes in a few years’ time. India’s current shipbuilding capacity is just over 0.1 million gross tonnes, as per government and industry data.

“The reforms will also support 250 million tonnes per annum additional port capacity while adding over 2,500 vessels,” Vaishnaw said. India’s current port capacity is 2,600 million tonnes per annum, as per data from ministry of ports shipping and waterways.

₹70,000-crore package being worked out”>Mint first wrote in August about a ₹70,000-crore package being worked out by the government for the shipping sector. It also wrote about infrastructure sector status for large ships and 3% interest subvention scheme for shipbuilding, all of which got cabinet approval on Wednesday.

Industry lauds move

“This is a pivotal moment for India’s shipbuilding sector. We welcome the Union cabinet’s approval of the ₹69,725 crore stimulus to strengthen India’s shipbuilding and maritime infrastructure,” said rear admiral Vipin Kumar Saxena (retd), chief executive officer (CEO), Swan Defence and Heavy Industries.

“The government of India’s renewed focus on shipbuilding and maritime infrastructure comes at a defining moment for the global industry,” said capt Anand Jayaraman, executive officer, Mitsui O.S.K. Lines South Asia Middle East Region. “As supply chains are being reconfigured worldwide, building scale and capacity within India will be critical to long-term competitiveness.”

Nagarajan Jambunathan, chief financial officer (CFO) at JSW Infrastructure welcomed the package. “Enhanced investments in port capacity, logistics infrastructure, and coastal shipping will not only accelerate trade flows but also enhance India’s global competitiveness,” he said, adding that the fiscal push will catalyse private sector participation and “help unlock the next phase of growth in India’s maritime economy”.

As per the Cabinet approval, the reform package for shipbuilding and maritime development rests on four pillars: financial assistance, long-term financing, cluster development, and legal reforms.

The first pillar

Pillar 1 comprises a ₹24,736-crore Shipbuilding Financial Assistance Scheme (SBFA) that is further divided into three components—financial assistance, ship breaking credit note, and National Shipbuilding Mission.

According to Vaishnaw, SBFA will provide financial assistance to shipyards — 15% incentive to vessels valued below ₹100 crore, 20% for those valued above ₹100 crore, and 25% incentive for special, green and hybrid vessels. The incentives would involve at least 30% value addition in the country. Allocation of ₹20,554 crore has been cleared up to March 2036 under this scheme.

The SBFA scheme would also provide a credit note of 40% of a vessel’s scrap value when scrapped in an Indian yard. Aimed at promoting domestic shipbuilding, this credit note can be used for reimbursement towards the cost of constructing a new vessel.

The second pillar

Pillar 2 includes ₹25,000 crore Maritime Development Fund”>setting up of a ₹25,000 crore Maritime Development Fund (MDF) having two components: a ₹20,000 crore Maritime Investment Fund and a ₹5,000-crore Interest Incentivisation Fund.

While the first fund would largely support equity investment in projects while also providing affordable long-term financing required by the sector, the second fund will provide a 3% interest subsidy on all loans taken for shipbuilding and related projects.

The MDF use cases would be for shipbuilding, shipbuilding clusters, ship repairs, ship ownership, port expansion, inland waterway transport, and coastal shipping.

“By focusing on expanding annual gross tonnage and developing mega shipbuilding clusters, the package enables Indian shipbuilders to scale infrastructure to global standards,” said Saxena. “It also makes the sector an attractive opportunity for both capital investment and knowledge sharing. The provision of long-term financing and risk mitigation reflects the kind of strategic support the industry has long awaited.”

Pillars 3 and 4

Pillar 3 includes a ₹19,989-crore Shipbuilding Development Fund that will incentivise the development of shipping and shipbuilding clusters in the country.

And the fourth pillar includes legal policy and process reforms that will bring together all stakeholders to evolve a framework for dispute resolution and arbitration.

“Policies such as the updated Shipbuilding Financial Assistance scheme are intended to overcome cost disadvantages and attract new stakeholders to the ecosystem,” said Pushpank Kaushik, CEO and head of business development (Subcontinent, Middle East and SouthEast Asia) at Jassper Shipping, a Hyderabad-based shipping and logistics company, adding that credit incentives for shipbreaking in Indian yards are a smart move to boost circular economy practices.

Other cabinet decisions

In other decisions, the Cabinet also approved a major expansion of medical education with a substantial ₹15,034.5 crore outlay to add 10,023 new medical seats. The initiative, part of the Centrally Sponsored Scheme (CSS), will create 5,000 postgraduate and 5,023 undergraduate (MBBS) seats by fiscal year 2028-29.

The focus is on strengthening and upgrading existing state and central government medical colleges and hospitals, to significantly increase the availability of doctors and specialists, and improve access to quality healthcare, particularly in rural and underserved areas.

This initiative builds on the progress already made, including a 127% increase in MBBS seats and a 143% rise in PG seats since 2014.

The cabinet also approved a ₹2,277 crore CSIR scheme for capacity building and human resources development, while clearing a ₹1,866 crore productivity-linked bonus scheme (payment of bonus equivalent to 78 days salary) for Railways employees ahead of the festive season that will benefit 10,90,000 non-gazetted employees of the rail network.

The cabinet also cleared a ₹2,192-crore project involving doubling of railway lines along the Bakhtiyarpur-Rajgir-Tilaiya section in Bihar. Further, it approved a ₹3,822-crore highway project in the poll-bound state involving four-laning of the Sahebganj-Bettiah section of the national highway.