India’s defence shipbuilding sector stands at a multi-decade transformation threshold, marking one of the most significant structural shifts in the country’s defence and manufacturing ecosystem in recent history. According to an institutional research report by Phillip Capital, cited by IBEF on December 22, 2025, the Indian defence shipbuilding and shipyard industry is poised for sustained long-term growth, driven by rising capital expenditure, strong government policy support, and increasing strategic demands in the Indian Ocean Region and the wider Asia-Pacific belt.

This transformation is not incremental but structural in nature. With the total value of shipbuilding and shipyard projects currently under implementation or already approved exceeding Rs. 2.3 trillion (US$ 27.7 billion), the sector has gained unprecedented visibility for the coming decades. The scale and complexity of platforms being built — including destroyers, frigates, corvettes, submarines, fleet support ships, and aircraft carriers — underline the maturity that India’s defence shipbuilding ecosystem is rapidly achieving.

Defence Shipbuilding at the Centre of India’s Strategic Vision

The India defence shipbuilding sector has emerged as a cornerstone of the country’s broader national security and strategic ambitions. As maritime security becomes increasingly critical amid evolving geopolitical dynamics, India’s focus on strengthening its naval capabilities has intensified. The Indian Ocean Region has become a key theatre of global strategic competition, necessitating a strong, technologically advanced, and self-reliant naval force.

Shipbuilding is central to this vision. Unlike other defence platforms, naval assets require long development cycles, extensive industrial capabilities, and deep integration of multiple supply chains. The current momentum in defence shipbuilding reflects a long-term commitment rather than a short-term policy push.

Massive Project Pipeline and Long-Term Visibility

One of the most defining features of the current phase is the sheer size of the order book. With projects worth over Rs. 2.3 trillion, the India shipbuilding industry latest news points to a multi-year execution cycle that provides stability and growth visibility to shipyards, equipment suppliers, and ancillary industries.

These projects encompass high-value and technologically complex vessels, including frontline combat ships and strategic platforms. Such visibility allows shipyards to invest confidently in capacity expansion, technology upgrades, workforce training, and supply chain localisation, creating a virtuous cycle of growth.

Shipbuilding and Maritime Development Package: A Game Changer

A major catalyst for this transformation is the Rs. 697 billion (US$ 8.4 billion) Shipbuilding and Maritime Development Package announced by the government. This comprehensive package aims to establish India among the top five shipbuilding countries in the world by 2047, aligning with the nation’s long-term development vision.

The package includes multiple layers of support, such as financial assistance, subsidies in the form of interest subvention, refund guarantees, and the establishment of eight coastal shipyard hubs. These measures are designed to reduce cost disadvantages faced by Indian shipyards when compared to their East Asian rivals, who benefit from scale, infrastructure, and state support.

By addressing structural cost challenges, the package significantly enhances the global competitiveness of defence shipyards India, paving the way for both domestic and export-led growth.

Naval Modernisation as the Primary Growth Driver

At the heart of the sector’s expansion lies naval modernisation India. The Indian Navy is undergoing one of its most ambitious modernisation programmes, aimed at replacing ageing platforms, expanding fleet size, and incorporating advanced technologies.

Expenditure on naval fleet acquisition is projected to surge to Rs. 244 billion (US$ 2.9 billion) in FY26, up sharply from Rs. 93 billion (US$ 1.1 billion). This nearly threefold increase highlights the priority accorded to maritime defence. In parallel, dockyard and project expenditures are also set to double, further strengthening the shipbuilding ecosystem.

Scale of Ongoing and Upcoming Construction

The scale of activity within Indian shipyards is unprecedented. Currently, more than 60 vessels are under construction for the Indian Navy, while another 70 to 80 vessels are in the pipeline. This includes a diverse mix of platforms, ranging from small patrol vessels to large capital ships.

Such a robust pipeline ensures sustained utilisation of shipyard capacities over the next decade and beyond. It also provides opportunities for technology absorption, process optimisation, and the development of indigenous design and engineering capabilities.

Indigenisation: A Structural Shift

One of the most significant changes in the Indian Navy shipbuilding landscape is the deepening focus on indigenisation. As per the report, nearly 75% of defence acquisitions are now being demanded from local vendors. This marks a decisive shift away from import dependence towards domestic manufacturing.

Indigenisation has far-reaching implications. It strengthens national security by reducing external vulnerabilities, supports domestic industry, creates skilled employment, and fosters innovation. Public sector shipyards, in particular, are well-positioned to benefit from this trend, given their experience, scale, and strategic role.

Rising Defence Capital Expenditure

The transformation of the defence shipbuilding sector is closely linked to the broader rise in defence capital expenditure India. Increased budgetary allocations for capital assets signal the government’s commitment to long-term capability building rather than short-term operational spending.

Higher capital expenditure enables investments in advanced platforms, infrastructure upgrades, and research and development. For shipbuilding, this translates into larger and more complex projects, higher value addition, and deeper industrial capabilities.

Public Shipyards and Private Sector Participation

India’s defence shipbuilding ecosystem comprises both public sector shipyards and an increasingly capable private sector. Public shipyards are expected to benefit significantly from the current momentum due to high levels of indigenisation, long-standing relationships with the Indian Navy, and access to large-scale projects.

At the same time, private sector participation is expanding, bringing efficiency, innovation, and competitive dynamics. This balanced ecosystem enhances resilience and ensures that India can meet its ambitious shipbuilding targets.

Defence Exports and Global Positioning

The growth of domestic shipbuilding capabilities has a direct impact on defence exports India. In FY25, India’s defence exports reached Rs. 236 billion (US$ 2.8 billion), underlining the increasing global acceptance of Indian defence products.

As shipbuilding capabilities mature, exports of naval platforms, components, and systems are expected to grow. This strengthens India’s position as a credible maritime power and supports its strategic presence in the Asia-Pacific belt, where naval influence is increasingly critical.

Strategic Importance of the Asia-Pacific and Indian Ocean Region

The emphasis on shipbuilding is also driven by strategic realities. The Indian Ocean Region and the Asia-Pacific have emerged as focal points of global trade and security. Protecting sea lanes, ensuring maritime dominance, and responding to emerging threats require a strong and modern navy.

India’s shipbuilding programme directly supports this objective by ensuring timely availability of advanced platforms tailored to regional requirements. This strategic alignment reinforces the rationale for sustained investment in the sector.

Economic and Employment Impact

Beyond strategic considerations, the defence shipbuilding sector has a significant economic impact. Large-scale shipbuilding projects generate extensive employment across engineering, manufacturing, logistics, and services. The establishment of coastal shipyard hubs further stimulates regional development and industrial clustering.

These hubs can create ecosystems that support ancillary industries, skill development institutions, and innovation centres, amplifying the economic benefits of the sector’s growth.

Technology, Innovation, and Capability Building

Modern defence shipbuilding is technology-intensive, involving advanced materials, propulsion systems, electronics, and weapons integration. The current growth phase provides an opportunity for India to build cutting-edge capabilities and reduce technological gaps.

Continuous project execution enables learning-by-doing, fostering innovation and improving productivity. Over time, this strengthens India’s ability to design and build complex platforms independently.

Long-Term Outlook and Sustainability

The multi-decade nature of the current transformation ensures sustainability. Unlike cyclical industries, defence shipbuilding benefits from long-term planning and assured demand. The combination of government support, strategic necessity, and industrial capability creates a strong foundation for sustained growth.

The top news headlines defence sector increasingly reflect this structural shift, highlighting shipbuilding as a pillar of India’s defence and industrial strategy.

Challenges and the Path Ahead

While the outlook is highly positive, challenges remain. These include timely project execution, cost control, supply chain resilience, and continuous skill upgradation. Addressing these challenges will require coordinated efforts between government, industry, and academia.

Policy stability, transparent procurement processes, and sustained investment in research and development will be critical to maintaining momentum.

Conclusion

In conclusion, India’s defence shipbuilding sector stands at a multi-decade transformation threshold, driven by unprecedented investment, strong policy support, and rising strategic imperatives. With projects worth over Rs. 2.3 trillion, a landmark Shipbuilding and Maritime Development Package, and a sharp rise in naval modernisation expenditure, the sector is poised for sustained long-term growth.

As indigenisation deepens and defence exports rise, India’s shipbuilding industry is set to play a pivotal role in strengthening national security, boosting economic growth, and enhancing the country’s global maritime standing. The coming decades are likely to define India’s emergence as a major shipbuilding and naval power on the world stage.

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