Cabinet Unveils ₹69,725 Cr Push for Shipping Sector, Incentive Scheme Gets Extension

The Union Cabinet, led by Prime Minister Narendra Modi, on Wednesday approved a comprehensive package of ₹69,725 crore for India’s shipping and maritime ecosystem. Under the package, the government is extending its Shipbuilding Financial Assistance Scheme (SBFAS) for the sector until 2036, while also introducing more programmes to "create a robust maritime infrastructure."

"The package introduces a four-pillar approach designed to strengthen domestic capacity, improve long-term financing, promote greenfield and brownfield shipyard development, enhance technical capabilities and skilling, and implement legal, taxation, and policy reforms," the Ministry of Ports, Shipping and Waterways said in a statement.

A new corpus of ₹24,736 crore is being allocated to extend the SBFAS. First introduced by the Government of India on December 9, 2015, the scheme aimed to provide financial support to Indian shipyards for contracts signed between April 1, 2016 and March 31, 2026. As of 2024, only 18 out of 39 registered shipyards had availed benefits under this scheme, indicating limited utilisation. SBFAS 2.0 was announced in the Budget for FY26.

A Standing Committee report released last year highlighted low utilisation and questioned the Ministry of Shipping’s claim that the increase in financial assistance availed over the years is sufficient proof of growing shipbuilding activity in India. The February 2024 report stated that 31 shipyards have been approved under the Shipbuilding Financial Assistance Policy so far, delivering 99 ships. Under the policy, ₹275.7 crore has been disbursed to shipyards as financial support.

The extended scheme now includes a Shipbreaking Credit Note of ₹4,001 crore. A National Shipbuilding Mission will oversee these initiatives.

Additionally, the Maritime Development Fund (MDF) with ₹25,000 crore has been approved, featuring a ₹20,000 crore Maritime Investment Fund (49% government participation) and a ₹5,000 crore Interest Incentivisation Fund to lower debt costs and improve project bankability.

The new Shipbuilding Development Scheme (SbDS) is also part of Wednesday's package, with an outlay of ₹19,989 crore. It aims to expand domestic shipbuilding capacity to 4.5 million GT annually, support mega shipbuilding clusters, enhance infrastructure, establish the India Ship Technology Centre, and provide risk coverage, including insurance for shipbuilding projects.

"The overall package is expected to unlock 4.5 million gross tonnage of shipbuilding capacity, generate nearly 30 lakh jobs, and attract investments of approximately ₹4.5 lakh crore into India’s maritime sector," the ministry said.