India's ₹70,000 cr bet on shipbuilding: Can it match China and Korea?

With nearly ₹70,000 cr in incentives, India eyes a bigger slice of the $150 bn global shipbuilding market

This story has been updated) 

India’s renewed push to increase its stake in the global shipbuilding industry received a further boost after the world’s third-largest container shipping giant CMA CGM S.A., led by Rodolphe Saadé, signed a Letter of Intent (LoI) with Cochin Shipyard Ltd to build six container vessels worth about $300 million on Wednesday (October 15), according to a report by the Economic Times. Each of these ships will have a capacity of 1,700 twenty-foot equivalent units (TEUs), the standard metric in container shipping, and will be powered by liquefied natural gas (LNG), a cleaner fuel that aligns with CMA CGM’s commitment to decarbonising maritime transport. 

 

This marks the first-ever container ship order placed in India by a global mainline operator and follows the Cabinet’s approval of a Rs 69,725-crore support package in September to boost the domestic shipbuilding industry. 

  India wants to build more ships at home, and the government is putting big money behind that ambition. The Union Cabinet approved a Rs 69,725 crore package on September 25 to revive India’s shipbuilding and maritime ecosystem. The plan includes long-term finance, development funds, and cluster incentives to turn India from a minor player into a credible builder of commercial and specialised vessels. 

The broader goal: reduce reliance on foreign shipyards and develop a globally competitive local ecosystem. But can India catch up with China, South Korea, and Japan?

 

India’s shipbuilding footprint remains small

 

India’s commercial shipbuilding market is currently modest, estimated at just $1.1 billion in 2024. The country accounts for less than 1 per cent of the global market. Capacity, too, is limited. KPMG pegs India’s current yard capacity at 0.072 million gross tonnes (GT), with a target of expanding to 0.33 million GT by 2030 and beyond.

 

Who builds ships in India today?

 

India’s shipbuilding sector has a dual structure. Public sector yards such as Mazagon Dock, GRSE, Hindustan Shipyard, and Goa Shipyard focus largely on naval and defence vessels. Private yards like Larsen & Toubro, Bharati Shipyard, and ABG Shipyard cater to commercial cargo, offshore support vessels, and ship repairs.

 

Even so, output remains limited. Mazagon and other defence-focused shipyards have large order books—Mazagon alone has orders worth Rs 40,000 crore but most of this is for the Indian Navy or Coast Guard, not commercial exports.

 

Asia’s giants dominate the global shipbuilding order book

 

China, South Korea and Japan dominate the global shipbuilding industry. In 2024, China accounted for 60–75 per cent of newbuilding orders by tonnage. South Korea and Japan together took up most of the rest, with large yards like HD Hyundai, Samsung Heavy Industries, and others leading the way.

 

The global shipbuilding market is estimated at around $150 billion annually. By contrast, India’s total commercial output remains in low single-digit billions, with far less tonnage capacity than global peers.

 

India’s capabilities are strong in defence, but limited in commercial scale

 

India’s less-than-1 per cent market share underscores its current limitations. While Indian yards are capable of building complex naval and offshore vessels, they lag in constructing large-scale commercial ships—such as container ships or LNG carriers—that are the bread and butter of global yards.

 

Constraints include limited dock capacity, higher production costs, and a smaller pipeline of large commercial orders. A report by S&P Global notes these as key hurdles.

 

What does the Rs 70k cr shipbuilding package promise?

 

The government’s four-pronged plan includes:

 

• Rs 24,736 cr Shipbuilding Finance Assistance Scheme (SBFAS) extended to March 2036
• Rs 25,000 cr Maritime Development Fund (including a Rs 20,000 cr investment arm)
• Rs 19,989 cr for shipbuilding cluster development
• Rs 4,001 cr in shipbreaking and vessel credit incentives

 

A key feature is the Shipbreaking Credit Note mechanism, which allows owners to claim 40 per cent of scrap value when scrapping in Indian yards. This offsets new-build costs and encourages domestic replacement. A National Shipbuilding Mission will monitor implementation.

 

Can India catch up with the giants?

 

The package aims to resolve long-standing bottlenecks: lack of finance, fragmented cluster infrastructure, and a weak commercial ecosystem. Some shipyards like Cochin Shipyard and Mazagon Dock have already announced greenfield expansions and potential tie-ups with Korean players. If these materialise, India could start building critical capacity.

 

But bridging the gap with China and South Korea will take sustained investment, policy consistency, and time. For now, the ambition has been set and the money is on the table.