Market Insight | Week 07

The announcement of Union Budget for 2025-26 in India at the beginning of the month, brought promising news for the country’s shipbuilding industry. India’s Finance Minister outlined a plan for the sustainable development of the national shipbuilding industry, including a Maritime Development Fund of $2.8 billion to support the national shipping industry and the extension of the Shipbuilding Financial Assistance Policy aiming to inject ca. $2.2 billion to the shipbuilding sector. These investments will primarily target infrastructure development, workforce training, R&D, all aimed at fostering maritime clusters to enhance competitiveness and leverage synergies. Moreover, the government will offer incentives to owners, such as a credit note equivalent to 40% of a scrapped ship’s value, to be used for newbuildings in Indian yards. Discussions are also underway with major liner groups to encourage the utilization of Indian shipyards for shipbuilding and ship repair.
India’s market share in the global shipbuilding is below 1%, inversely proportional to the country’s size and population. Its shipyards are predominantly focused on building small up to medium vessels, generally below 20,000 dwt. To date, over 1,350 vessels have been built domestically, with a significant share being Offshore and General Cargo vessels. The largest vessel ever built in India was an Aframax tanker of 93,322 dwt, constructed at Cochin Shipyard in 2002 for the Shipping Corporation of India. Since 2006, Indian yards have also delivered 8 Panamax, 5 Supramax, and 13 Handysize vessels in the dry cargo segment.
Currently, Indian shipyards hold a modest orderbook of 96 vessels (460k dwt). General Cargo units dominate this pipeline, accounting for over 60% of the total orderbook, with an average size of 5,9k dwt. Notably, Indian yards contribute 10% of the global order volume for such vessel types. The largest vessel under construction is a 19,100 dwt TSH Dredger, commissioned by the state-owned Dredging Corporation of India at Cochin Shipyard for €104 million. Among the most active shipyards, Chowgule Group leads with 29 vessels on order, followed by the state-owned Cochin shipyards with 27 units. The clientele consists of public sector entities and Western European operators.
However, India’s shipbuilding sector faces considerable challenges that limit its competitiveness on a global scale. Most domestic yards lack the capacity to construct larger vessels and lag in advanced technological capabilities compared to shipyards of leading shipbuilding nations. Financing remains a critical constraint, due to a lack of long-term credit facilities. Given the high concentration of the shipbuilding industry with China, Japan and S. Korea collectively controlling over 90% of the new orders, it is a steep path for India to expand rapidly in the next years. However, the country does possess certain advantages that could drive future growth, including a strategic geographical location, low labour costs, and increasing government support. Moreover, the local yards have developed expertise in the construction of certain niche vessel types, which could offer a competitive advantage. The aging fleets of such sectors, present an opportunity for Indian shipbuilding. MPPs, General Cargo vessels and AHTS have average age exceeding 20 years old. A considerable portion of these vessels (ranging from 20% for AHTS to 35% for MPPs) is over 25 years old, indicating a need for fleet renewal. The same need is evident within India’s domestic fleet, which comprises 2,247 vessels with an average age of 21 years. More than half of these vessels are Offshore or General Cargo. Notably, 40% of India’s owned fleet has been domestically built, followed by Chinese (14%) and South Korean (7.6%) yards.
While its shipbuilding sector currently ranks low on the global scale, the government’s commitment to financial support could significantly improve its prospects provided these funds are efficiently allocated. Although the ambition to become a top-tier shipbuilding nation by 2030 may sound optimistic, a more realistic approach could yield substantial progress. By initially focusing on its strengths (small to medium-sized vessels in niche markets such as MPPs, General Cargo, and Offshore sectors) India can establish itself as a credible player and later expand to larger vessels ‘construction. Indian shipyards have the potential to become a viable alternative to the dominant East Asian players and a considerable global player in shipbuilding and ship repair sectors.