India has unveiled its intention to set up an INR 250 billion (about $2.9 billion) maritime development fund (MDF) to grow the national ship fleet and support the domestic shipbuilding and repair sector.
The long-term financing plan for the maritime industry was presented by Union Finance Minister Nirmala Sitharaman on February 1, 2025.
As informed, the Government of India will contribute up to 49 percent to the fund , with the private sector, port authorities, financial institutions and other government entities covering the remainder of the sum. The financial assistance will be provided via equity or debt securities, according to the government.
Objectives of the new fund are:
As per the government, the MDF is primarily intended for financing ship acquisitions, in line with the country’s strategy to increase the share of Indian-flagged vessels to 20% by 2047 .
What is more, the enriched domestic fleet would reduce dependency on foreign ships and improve the balance of payments, contributing to India’s strategic interests.
The Union Budget also provided a ‘shot in the arm’ to India’s domestic shipbuilding industry after it announced new mega shipbuilding clusters in the country in an effort to increase the range, categories, and capacity of ships. The proposed allocation of ₹6,100 crore ($700 million) aims to support India’s existing shipyards in upgrading, modernizing, and automating their operations, enhancing efficiency, utilization, and overall output.
Furthermore, the Union Budget has extended the Shipbuilding Financial Assistance Policy (SBFAP) 2.0, aimed at providing direct financial subsidies to Indian shipyards. This initiative seeks to help in securing orders by offsetting operational cost disadvantages, thereby strengthening the domestic shipbuilding industry.
“It is reassuring to see that the budgetary initiatives for India’s marine sector are focused on unlocking its vast potential and enhancing existing assets through upgrades, modernisation, and automation. A key highlight is our ministry’s development of new shipbuilding clusters of 1.0 to 1.2 Million Gross Tonnage (GT) each,” Sarbananda Sonowal , The Union Minister of Ports, Shipping & Waterways, commented.
“This strategic push is crucial in realising India’s vision of becoming a $30 trillion economy by 2047. By leveraging the Public-Private Partnership (PPP) model, the scheme is designed to attract private investment, promote modernisation, and advance green technologies. These efforts will enhance India’s global competitiveness, drive sustainable growth, and solidify its position as a leading Global Maritime Hub.”
Another innovative scheme announced in the budget is the shipbreaking credit note to promote the circular economy. This scheme incentivizes ship scrapping by issuing a credit note of 40% of the scrap value which can be reimbursed to buy new ‘Made in India’ ships.
Finally, large ships will be now accounted as infrastructure assets, enabling easy access to long-term financing and tax incentives. This will help attract private investments in the maritime sector and enhance fleet modernization, according to the government.