India Shipping Industry: A Gateway to Global Maritime Leadership Introduction

• India’s shipping industry plays a pivotal role in its economic development, underpinning international trade and commerce.
•  Spanning a coastline of over 7,517 km, India is ranked as the 16th largest maritime nation globally. 
• Despite the growth in port infrastructure and maritime investments, India’s shipping and shipbuilding sector has yet to reach its full potential. 
• However, the Union Budget 2025-26 has introduced several measures to transform the sector, with the goal of establishing India as a global maritime powerhouse. Stocks of top shipping companies, including Shipping Corporation of India, GE Shipping and Essar Shipping, responded positively to the announcements. 

Current Status of India’s Shipping Industry

• India’s shipping industry is vital for managing the nation’s trade, handling a significant share of both volume and value in its maritime activities:
• Ship Exports: India stands as a leader in the export of shipping vessels, commanding 33% of the global market share (as reported in the Economic Survey 2024).
• Global Shipbuilding and Ship Ownership: Despite its role in exports, India has a modest presence in the global shipbuilding market with only a 0.07% share, and it owns about 1.2% of the world’s ships.
• Trade Handled by the Maritime Sector: Approximately 95% by volume and 70% by value of India’s trade is managed through the maritime sector.
• Ship Recycling: India ranks as the third-largest ship recycler globally, contributing 30% of the total market share, and houses the world’s largest ship-breaking facility in Alang.
• Port Infrastructure: India has 13 major ports and more than 200 minor and intermediate ports, supporting the vast scale of its maritime trade.
• Despite these statistics, there is ample room for improvement in global competition and market positioning.

Key Announcements for the Shipping Industry in Budget 2025-26

• The Union Budget for 2025-26 makes substantial strides in addressing the challenges of the maritime sector through several initiatives:
• Allocation: The Budget allocation to the Ministry of Ports, Shipping and Waterways for 2025-26 increased to ₹3,471 crore (revenue of ₹1,709 crore and capital of ₹1,761) for the year 2025-26. This is 21% increase over revised budget of ₹2,859 crore (revenue of ₹1,516 crore and capital of ₹1,342 crore) for 2024-25. 
• Maritime Development Fund: The government has introduced a Rs. 25,000 crore Maritime Development Fund aimed at improving global competitiveness through long-term financing. However, only 49% of the fund will come from the government, with the rest expected to come from major ports, which raises questions about its long-term sustainability.
• Shipbuilding Clusters: The Union Budget also proposed to facilitate ‘Shipbuilding Clusters’ to increase the range, categories and capacity of ships. This will include additional infrastructure facilities, skilling and technology to develop the entire ecosystem.
• Financial Assistance Policy: Ship building Financial Assistance Policy will be revamped to address cost disadvantages, which will also include Credit Notes for shipbreaking in Indian yards to promote the circular economy . 
• Tonnage Tax Scheme: The benefits of the existing tonnage tax scheme are proposed to be extended to inland vessels registered under the Indian Vessels Act, 2021 to promote inland water transport in the country.
• Infrastructure Status for Large Ships: Granting infrastructure status to large ships will significantly lower financing costs by as much as 10 percentage points, easing access to funding for shipbuilding.
• Special Economic Zones (SEZs) & International Financial Centres (IFSCs): Incentives at GIFT City, Gujarat, will attract global players in ship leasing, insurance, and treasury services, helping India position itself as an attractive destination for maritime businesses.
• Basic Customs Duty Exemptions: The budget also proposes a 10-year extension of duty exemptions on raw materials, components, and consumables used in shipbuilding. This move will help reduce the costs of shipbuilding in India.

Government Initiatives for Maritime Growth

The Indian government has been implementing several key programs to enhance its maritime capabilities:

• • Sagarmala Program (2015): Under the Sagarmala Program, the government aims to modernize 12 major ports and develop port connectivity across the country. The goal is to increase the efficiency of port operations and reduce the cost of logistics.  The program seeks to increase the share of coastal shipping in domestic cargo transport from 6% to 12% by 2035.
  • Green Tug Transition Program (GTTP):  The GTTP aims to replace conventional fuel-powered harbor tugs with environmentally friendly alternatives such as electric-powered tugs and LNG-powered tugs. By 2040, the GTTP plans to fully transition the harbor tug fleet to green technologies, making India a global leader in green maritime practices. The program is expected to cut down port emissions by over 50% and improve air quality in coastal regions.
  • Maritime India Vision (MIV) 2030: MIV 2030 lays out 150 initiatives to boost port-led development, modernization of shipping infrastructure, and inland water transport, aiming to make India a global leader in the maritime sector. Under MIV 2030, India is focused on improving port efficiency, aiming for a 100% digitalization of port processes and 100% green port certification by 2030.

• National Waterways Development:  It aims to expand the network of National Waterways (NW), with a focus on developing 5,000 km of navigable inland waterways. As part of this initiative, the government aims to increase cargo movement on inland waterways by 60% by 2030.

Why Investment in Maritime Infrastructure is Essential for India? 

• Strategic Positioning in the Indo-Pacific: India’s maritime infrastructure is key to its SAGAR Vision, which focuses on bolstering India’s role in regional maritime security. The India-Middle East-Europe Economic Corridor (IMEC) is a significant initiative aimed at countering China’s dominance in the maritime trade routes, further solidifying India’s leadership in the Indo-Pacific region.
• Employment Generation & Skill Development: India ranks as the third-largest seafarer supplier globally, contributing 10% of the world’s maritime workforce. Strengthening the maritime sector would generate millions of skilled and semi-skilled jobs across the shipbuilding and port operations industries. According to the Sagarmala Program, port modernization and port-led industrialization projects are expected to generate up to 4 million jobs by 2035.  As part of the Maritime Skill Development Program, the government is planning to create additional 50,000 jobs in the maritime sector by 2030 through training initiatives focused on shipbuilding, maritime security, and logistics. 
• Promoting Environmental Sustainability: India’s maritime infrastructure development aligns with its COP28 commitments and the IMO’s 2050 Net-Zero Emissions Target.  Investment in green shipping technologies—such as hydrogen-powered ships, LNG bunkering, and solar-powered port operations—will not only help meet these targets but also establish India as a leader in sustainable maritime practices.

•  Indian ports like Jawaharlal Nehru Port Trust (JNPT) are already taking steps toward greener operations by incorporating solar panels and wind turbines for power generation. 
• The Indian government’s Green Tug Transition Program (GTTP), which aims to replace conventional fuel-powered harbor tugs with electric and LNG-powered tugs by 2040, is expected to reduce maritime emissions by over 50% in the next two decades.

• Economic Security & Trade Resilience: India’s reliance on foreign vessels for 95% of its international cargo increases vulnerability to global disruptions. For example, the Red Sea Crisis has led to severe disruptions in global shipping routes, resulting in delays and soaring freight costs. According to estimates, by expanding India’s domestic shipping capabilities, freight costs could be reduced by 10-15% over the next decade. This reduction will help bring down the overall cost of logistics, which is currently 13-15% of GDP—significantly higher than the global average of 8-10%.  

• • Port Capacity & Turnaround Time: Indian ports are becoming increasingly efficient, but there is still room for improvement in port capacity and turnaround time. The introduction of automation, blockchain, IoT, and AI technologies in port operations can help reduce the turnaround time from an average of 48 hours to just 6 hours, as seen in ports like Jebel Ali Port in the UAE. This will significantly enhance the efficiency of India’s trade infrastructure.

• Coastal Shipping & Multimodal Logistics: Coastal shipping accounts for only 6% of India’s domestic freight movement. Expanding coastal shipping through better connectivity between ports and industries would reduce India’s logistics costs by 15-20%. 

Challenges in India’s Maritime and Shipbuilding Sector

• Skilled Workforce Shortage & Technology Gaps: While India supplies a significant share of the global maritime workforce, there is a shortage of skilled labor in shipbuilding. According to estimates from the Shipbuilders Association of India, approximately 30% of the required workforce in shipbuilding and related maritime operations remains unfulfilled, leading to inefficiencies in domestic ship production. 

• While countries like South Korea and China lead in technological advancements with the use of automation, robotics, and AI-driven shipbuilding processes, India’s shipyards largely rely on outdated methods. For example, in 2019, India produced only 5% of the world’s ships, compared to China’s 46.6% and South Korea’s 22%.

• Regulatory & Policy Delays: Regulatory hurdles, such as land acquisition issues and compliance with Coastal Regulation Zone (CRZ) guidelines, often delay critical port expansion projects. According to the Ministry of Shipping, the average delay for port development projects is 2-3 years due to these regulatory processes. T

• The JNPT (Jawaharlal Nehru Port Trust) expansion, aimed at accommodating larger container vessels, was delayed by over two years due to regulatory issues, further impacting India’s capacity to compete in the growing global container shipping market.

• Financing & Infrastructure Constraints: Ships are not classified as infrastructure, which restricts long-term financing options. Even though shipyards were granted infrastructure status in 2016, the SARFAESI Act prevents ships from being mortgaged, limiting banks’ ability to offer long-term loans.
• Port Infrastructure & Operational Inefficiency: India’s ports handled 1.4 billion tonnes of cargo in 2022-23, but there are significant inefficiencies. The country’s major ports are often unable to accommodate ultra-large container vessels (ULCVs), which are becoming the norm in global shipping. 

• For example, Mumbai Port has a maximum depth of 14 meters, whereas ports like Singapore and Shanghai can handle vessels with a depth of up to 20 meters. 
• As a result, many large vessels are forced to transship cargo at ports in Singapore, Colombo, and Dubai. 
• India currently handles only 50% of its containerized cargo domestically, with the remaining being transshipped to neighboring countries, costing the Indian economy $1 billion annually in added logistics costs. 

• Competition and Global Market Positioning: China dominates the global shipbuilding market, accounting for 46.6% of global output. In comparison, India’s share in global shipbuilding is a mere 0.07%, producing only around 1,000 ships annually. Indian shipyards operate at 60-70% capacity, far from the full potential. 
• Slow Growth in Coastal Shipping:  Despite having a coastline that stretches over 7,500 km, coastal shipping accounts for just 6% of India’s domestic freight movement, compared to 40-45% in countries like China and Japan. The lack of dedicated freight corridors for coastal shipping contributes to inefficiencies and raises the overall cost of logistics. 

Future Roadmap & Policy Recommendations

• Strengthening Domestic Shipbuilding:
  • Establish a National Shipbuilding Mission with financial support to boost domestic production.
  • Implement a Production-Linked Incentive (PLI) scheme for shipbuilding.
  • Improve access to long-term financing at concessional rates, similar to the model of South Korea’s Korea Ocean Business Corporation, which provides low-cost financing to its shipbuilders.
• Enhancing Indian Shipping Competitiveness:
  • Offer tax incentives to Indian shipowners to expand their fleet and compete globally.
  • Reintroduce the Cargo Reservation Policy to ensure a greater share of Indian-flagged vessels in international trade.
  • Reduce taxes on ship leasing and ship financing to make the sector more attractive.
• Boosting Coastal Shipping & Inland Waterways:
  • Improve last-mile connectivity between ports and industrial hubs.
  • Expand multimodal logistics hubs as part of the PM Gati Shakti initiative to streamline logistics.
  • Promote ferry services and RoRo (roll-on/roll-off) services to enhance coastal shipping.
• Enhancing Port Infrastructure & Operational Efficiency:
  • Develop ULCV-friendly ports to reduce dependency on transshipment hubs.
  • Invest in automation, blockchain, IoT, and AI technologies to enhance port operational efficiency, as seen in Jebel Ali Port in the UAE.
• Green Shipping & Sustainability Initiatives:
  • Invest in hydrogen-powered ships, LNG bunkering facilities, and solar-powered ports to align with global sustainability targets, as demonstrated by Norway’s electric ferry fleet.
• Public-Private Partnerships (PPP):
  • Foster greater foreign investment in shipbuilding and port development, as exemplified by Singapore’s PSA Port Expansion, which has transformed the country into a global transshipment hub.