Govt’s package de-risk shipbuilding progs—following a model that helped Korea, Japan become maritime powers: Sonowal

Shipping minister Sarbananda Sonowal, in an emailed interview, highlighted the government’s priorities, the scale of planned interventions, and how the package will reshape the future of India’s maritime economy.

Edited excerpts:

The government has taken one of the biggest moves in the maritime sector since independence by approving a mega ₹70,000 crore financial incentive package. How will these measures now translate into converting India into a global maritime hub?

The government’s ₹70,000 crore incentive package is designed to transform India into a global maritime hub through three key measures.

The Shipbuilding Financial Assistance Scheme (SBFAS) provides incentives to Indian shipyards for domestic shipbuilding, including a ship-breaking credit note to promote recycling and new construction in India.

The Maritime Development Fund (MDF) offers long-term, low-cost financing to support shipyards, ports, and related maritime industries.

The Shipbuilding Development Scheme (SbDS) focuses on creating greenfield clusters, expanding brownfield capacities, and providing risk cover to facilitate large-scale shipbuilding.

Together, these initiatives address India’s historic cost and financing disadvantages, aggregate demand, and de-risk shipbuilding programmes—following a model that helped China, Korea, and Japan become maritime leaders.

The package is expected to generate approximately 3 million direct and indirect jobs, significantly boost domestic shipbuilding capacity, and increase India’s share in EXIM carriage, advancing the prime minister’s vision of strategic resilience, logistics efficiency, and a globally competitive maritime sector.

Shipbuilding is one of the package's main objectives. How do we wish to progress in this area? Will we now seek global shipbuilders to start making ships of all kinds in the country?

We are moving ahead with a comprehensive approach.

The revamped Shipbuilding Financial Assistance Scheme (SBFAS) provides 15–25% support depending on vessel type and value, with additional incentives for green, hybrid, and specialized ships. The Shipbuilding Development Scheme (SbDS) is creating new clusters and upgrading brownfield yards, while the India Ship Technology Centre at the Indian Maritime University will unify design, software, R&D, and high-end computing, alongside enhancing skilled manpower for the sector.

We are actively inviting global shipbuilders—through joint ventures or direct investment—to manufacture all classes of vessels in India, supported by clear localization ramps and supplier development. This is Make-in-India in action, fully aligned with our Prime Minister’s vision of a self-reliant and globally competitive maritime industry.

Now that the policy initiatives for the sector are in place, will the ministry plan roadshows in key maritime markets again to bring investment in the country? Have substantial investment and technology partnerships happened to boost shipbuilding and ancillary industry in India?

The ministry plans to conduct targeted roadshows in key maritime markets such as East Asia, Europe, and the Middle East. These roadshows will focus on attracting anchor tenants for shipbuilding clusters, forging design and technology partnerships, localizing supplier bases, and promoting green transition solutions. At the same time, structured initiatives are already underway to develop tooling, sub-assembly, and vendor capabilities, ensuring that ancillary industries grow alongside the shipyards. These steps are expected to bring substantial investment and technology partnerships to India, strengthening domestic shipbuilding and creating a globally competitive maritime ecosystem.

The package has also proposed creation of ₹25,000 crore MDF. When will the fund be rolled out and how will it operate?

The government has proposed a ₹25,000 crore Maritime Development Fund (MDF) to boost investment in India’s maritime sector. The fund will operate through two windows: Maritime Investment Fund (MIF)– ₹20,000 crore investment platform which will have the government’s stake capped at 49% ( ₹9,800 crore), and to encourage participation from ports and private players. It includes blended-finance features to attract additional capital. MIF is expected to enable investments of around ₹1.82 trillion.

The second window under the scheme is the Infrastructure Incentive Fund (IIF)– ₹5,000 crore: This window provides interest subvention of up to 3% on loans to Indian shipyards from regulated Indian lenders, potentially supporting ₹36,000- ₹50,000 crore in credit.

The MDF will receive budgetary support up to FY2036, but the fund itself will continue beyond this period, creating a long-term framework to accelerate shipbuilding, port development, and related maritime infrastructure, in line with PM Modi ji’s vision of a strong, self-reliant maritime sector.

The package has also talked about the revamped ship-building financial assistance fund (SBFA). How will the new scheme operate and what changes are proposed?

The revamped Shipbuilding Financial Assistance Fund (SBFA) is designed to support new ship orders placed up to March 31, 2036, with the scheme remaining valid until 2047. Under the scheme, normal vessels costing less than ₹100 crore will receive 15% financial assistance, while vessels above ₹100 crore will get 15% on the first ₹100 crore and 20% on the remaining cost. Green, hybrid, and specialised vessels will receive 15% up to ₹100 crore and 25% beyond.

Eligibility varies by vessel type: normal ships must be at least 24 metres long, hybrid and electric vessels 12 metres, green fuel vessels have no length limit, and dredgers 10 metres or more. Vessels with at least 40% domestic content will receive full assistance, with a minimum threshold of 30%.

Support for defence vessels will be finalized in consultation with the ministry of defence.

The scheme also introduces a ship-breaking credit note, which allows shipbuilders to use 40% of a vessel’s scrap value toward new construction. This credit is transferable, valid for three years, and can cover up to 5% of the new ship’s price. Together, these measures aim to boost domestic shipbuilding and create a circular maritime economy.

What is the plan on ship-building clusters as proposed by the ministry earlier? Has any large domestic or foreign shipbuilder shown an interest in being part of the shipbuilding-cluster programme?

Under the ministry’s proposed Shipbuilding Development Scheme (SbDS), greenfield clusters are being provided with common maritime assets worth ₹9,930 crore, while brownfield expansions, supported with ₹8,261 crore, aim to accelerate time-to-capacity. The cluster model includes plug-and-build land parcels, utilities, vendor parks, and access to R&D through the International Ship and Technology Centre (ISTC). Both leading domestic shipbuilders and major international players have expressed strong interest in participating, signalling robust confidence in India’s evolving shipbuilding ecosystem.

The government has also included large ships in the infrastructure harmonised master list (HML). How will the measure help?

Including large ships in the Harmonised Master List (HML) of infrastructure marks a transformative step under the government’s vision for an Atmanirbhar Bharat with a globally competitive maritime sector. This move improves access to long-tenor, lower-cost finance, widens eligibility under infrastructure lending norms and bond markets, and enables refinancing and guarantee mechanisms.

When coupled with the Maritime Development Fund (MDF) and the Shipbuilding Financial Assistance Scheme (SBFAS), it significantly reduces lifecycle financing costs for Indian shipowners. Most importantly, it creates the right conditions to shift more EXIM cargo carriage to the Indian flag—fulfilling a core objective of Maritime Amrit Kaal roadmap to make India a leading maritime power.

What kind of investments is the government seeing in India’s maritime sector following the new proposals?

Since 2014, the government has fundamentally reshaped the investment landscape of India’s maritime sector. Through innovative mechanisms like the Maritime Development Fund’s (MDF) blended finance, updated Harmonised Master List (HML) status, and Shipbuilding Financial Assistance Scheme (SBFAS) incentives, a strong and bankable pipeline is being created for vessel owners, shipyards, and suppliers. The crowd-in effect of these reforms is already visible, with anticipated flows into vessel SPVs with central PSUs, cluster SPVs with states and ports, and vendor capital expenditure. This package has been carefully designed to unlock large volumes of private and port-sector capital while keeping government exposure catalytic and capped—ensuring long-term sustainability and growth.

What are your goals towards making India a leader in the blue economy of the world?

The maritime sector—long neglected under successive Congress-led governments since independence—has been placed at the core of India’s growth and development. Maritime Amrit Kaal Vision is propelling the nation towards becoming a global leader in the blue economy by 2047, driving Atmanirbhar Bharat and Viksit Bharat.

The plan focuses on quadrupling port capacity to over 10,000 MMTPA through world-class ports like Vadhvan, streamlining efficiency with the One Nation One Port process, and raising the coastal shipping and inland waterways share to 12%. Cruise tourism is set to expand, with India aiming to become the Asia-Pacific’s top cruise hub with 50 lakh passengers annually.

Shipbuilding is being revived through a four-pillar policy of financial assistance, long-term financing via the Maritime Development Fund, greenfield and brownfield expansions, and reforms in legal and taxation frameworks—placing India among the world’s top five shipbuilders.

Alongside, India is advancing global trade connectivity with IMEEEC and INSTC corridors, fostering sustainability with green hydrogen hubs and green tug transitions, and expanding maritime skills to target a 20% global seafarer share by 2030. These steps reflect the government’s unwavering resolve to turn India into a globally competitive maritime power and a leader in the blue economy.

What plan is being worked out for expanding capacity handling at major ports and other initiatives to improve the efficiency of ports?

Our plan for expanding handling capacity at India’s major ports is anchored in the goal of building an Atmanirbhar and Viksit Bharat by 2047, with a maritime sector that stands as a globally recognized top-tier force.

The roadmap envisions a significant capacity expansion from 2,690 MMT to 10,000 MMT by 2047, driven by the operationalisation of deep-draft ports like Tuticorin International Container Terminal and the development of world-class new ports such as Vadhavan, which is set to become one of the largest globally with 298 MMT capacity.

Efficiency improvements are central to this transformation, with initiatives in mechanization, automation, and digitalization, including the ‘One Nation One Port’ process to standardize operations and reduce delays. Public-private partnerships (PPPs) are being promoted aggressively, with the share of PPP cargo handling at major ports set to rise from the current 60% to 90% by 2047.

Connectivity is also being strengthened through more than 20 rail and road projects integrated with PM Gati Shakti to enhance seamless hinterland access. Alongside, port-led industrialization is being catalysed through special economic zones, logistics parks, and multi-modal transport hubs around ports.