The Indian government's renewed commitment to boosting the shipbuilding sector comes at a critical time when the industry has faced several challenges, including underutilized support funds and limited competitiveness on the global stage. With a strategic focus on enhancing India’s maritime capabilities, the Union Budget for 2025 lays the foundation for a robust growth trajectory for the shipbuilding industry, positioning it as a critical player in global trade.

Key Budget Announcements for Shipbuilding

One of the most notable measures in the Union Budget 2025 is the establishment of the Maritime Development Fund (MDF), with a massive allocation of Rs. 25,000 crore (US$ 2.87 billion). This funding is intended to revitalize and expand India’s shipbuilding infrastructure, making it more competitive on the global stage. The MDF aims to provide financial assistance to key players in the maritime industry, addressing the financing challenges that have hindered its growth in the past.

In addition to the MDF, the Indian government has introduced a Shipbuilding Financial Assistance Policy. This policy will make it easier for shipbuilders to access infrastructure credit, facilitating the construction of more vessels and strengthening the shipbuilding ecosystem. Another significant move is the extension of customs duty exemptions for raw materials and parts required for shipbuilding. This exemption will remain in place for the next decade, offering much-needed relief and support to manufacturers in the sector.

Focus on Ship Leasing and Global Competitiveness

Aiming to attract global investment in the shipbuilding industry, the government has introduced capital gains tax exemptions for non-residents investing in ship leasing through units in the Gujarat International Finance Tec-City (GIFT). This step is expected to boost foreign investments, bringing in both capital and expertise to elevate India’s shipbuilding capabilities. These policy changes and exemptions are designed to address existing financial challenges and create a more favorable environment for growth in the industry.

India’s Expanding Maritime Fleet

The Indian government is also focused on expanding its maritime fleet to reduce reliance on foreign shipping companies, which currently dominate global trade. Presently, India’s fleet accounts for just 2.6% of the global fleet, a number the government aims to increase significantly in the coming decade. As part of this effort, the government plans to establish a new shipping company in partnership with state-run oil, gas, and fertilizer companies, along with the Shipping Corporation of India. This public-private collaboration will focus on expanding India’s share in the global shipping market.

Subsidy to Support Indian Shipbuilding Companies

To further bolster the Indian shipbuilding sector, the government has committed Rs. 1,624 crore (US$ 186.5 million) in subsidies over the next five years. These subsidies will be used to incentivize Indian companies to actively participate in global tenders, enabling them to compete with international shipbuilders. This initiative is part of a broader strategy to create a more competitive environment and reduce the industry’s dependence on foreign ship manufacturers.

Long-Term Vision for Shipbuilding Growth

Despite the current challenges faced by the Indian shipbuilding industry, the government’s initiatives under the 2025 Union Budget demonstrate a strong, long-term vision for its growth. By increasing support to Indian shipbuilders, facilitating easier access to financing, and fostering international collaborations, India aims to position itself as a global leader in the shipbuilding sector. The policies outlined in the budget provide a solid foundation for growth in the coming years, fostering innovation, competition, and sustainability within the maritime industry.

The budget's emphasis on expanding India’s fleet, fostering global trade through increased shipbuilding competitiveness, and promoting financial and infrastructural development within the industry are key steps in the government's strategy to elevate the maritime sector to new heights.

For more insights on India’s growing shipbuilding industry and its potential to compete on the global stage, stay updated with Top News Headlines covering the latest developments and economic initiatives.

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