The Ministry of Ports, Shipping and Waterways has begun discussions to draft a scheme to promote the local manufacturing of components and parts used in shipbuilding, as the government tackles another key aspect of its bid to make India one of the top five shipbuilding nations by 2047, multiple sources said.

The move follows efforts to boost manufacturing of cargo containers (announced in the Union Budget) and maritime cranes, where China is the undisputed leader.

Along with container manufacturing, we have also started working on a promotional scheme for maritime crane manufacturing which is a critical area," said a government official.

"Another area we are tackling is shipbuilding components. The government has given huge support for shipbuilding, but the issue of components also needs to be addressed. Shipbuilding is such a massive industry, it requires hundreds of components where some government support is required. We have started working on that. As India develops shipbuilding clusters, support is vital to develop the ancillary industries that will manufacture components and parts," the government official said.

The planned promotional scheme for component manufacturing is expected to include a capex subsidy and a production-linked incentive, the official added.

"Shipbuilding is an ancillary-driven industry just like cars," said Manish Sharma, Partner and Leader (Infrastructure, Transport, Logistics), PwC India.

Busan is one of the largest cities in South Korea, where the entire shipbuilding ecosystem operates just-in-time. Engines, anchors, propellers, steel, paint, electrical and accommodation units are sitting right next to the shipyard.

"You don't have to order materials in advance, store it in the yard to make them available on time which increases the inventory carrying costs," Shamra said.

The planned scheme for promoting shipbuilding component manufacturing aligns with the move by HD Korea Shipbuilding & Offshore Engineering (HD KSOE), the holding company of South Korea's HD Hyundai's shipbuilding and offshore division, to set up a USD 4 billion greenfield shipyard on its own at Thoothukudi in Tamil Nadu with a capacity to produce 3.5 to 4 million gross tonnage (GT) a year.

Besides taking on the mantle of the anchor shipyard in the Thoothukudi shipbuilding cluster, Hyundai Heavy Industries, the world's biggest shipbuilder, is also planning to bring its entire shipbuilding vendor ecosystem there.

The cluster spread over some 3,000 acres will also accommodate vendors, the government official mentioned earlier said.

HD Hyundai is also looking to set up a crane manufacturing unit in the Thoothukudi shipbuilding cluster. The South Korean shipbuilder signed a memorandum of understanding in December 2025 with state-owned BEML Ltd to collaborate on making maritime cranes.

In September 2025, the Union Cabinet approved a Rs 69,725 crore package to promote the local shipbuilding industry.

The package includes a Rs 24,736 crore Shipbuilding Financial Assistance Scheme (SBFAS) comprising 20,554 crore for financial assistance to shipyards, Rs 4,001 crore for shipbreaking credit notes (40 per cent of scrap value reimbursed) and Rs 181 crore for a National Shipbuilding Mission to oversee the initiatives.

The Rs 25,000 crore Maritime Development Fund (MDF) will comprise Rs 20,000 crore as the Maritime Investment Fund (with 49 per cent government equity) and Rs 5,000 crore as the Interest Incentivisation Fund (with up to 3 per cent interest incentive). The Maritime Development Fund will be a blended finance model to attract private investment.

A separate Shipbuilding Development Scheme (SbDS) with a corpus of Rs 19,989 crore was also approved by the cabinet. This includes Rs 9,930 crore for greenfield shipbuilding clusters, Rs 8,261 crore for brownfield expansion, Rs 305 crore for India Ship Technology Centre (ISTC) and Rs 1,443 crore for risk-related credit cover.

The Ship Building Financial Assistance scheme seeks to overcome the cost differential faced by local yards compared to foreign shipyards, and incentivise ship building by issuing credit notes while recycling ships in India.

The MDF will enable access to competitive, long-term financing for the maritime sector through equity and debt-based funding.

The Shipbuilding Development Scheme aims to develop capacity at Indian shipyards to meet the Maritime India Vision 2030 and the Maritime Amrit Kaal Vision 2047 targets. It also seeks to develop domestic capability in skills, R&D, ship design, and common facilities and assets.

Indian entities plan to build as many as 437 ships of various types, with a Gross Tonnage (GT) of 19 million, worth Rs 2.2 lakh crores. Of this, 62 vessels are expected to be ordered over the next 12 months.

Source: ET Infra. Com 

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