Introduction

India has achieved a remarkable milestone by becoming the world's largest ship recycling nation in 2025, well ahead of the Maritime India Vision (MIV) 2030 target. This success is being leveraged through major policy reforms, financial incentives, and strategic partnerships to transform India into a global shipbuilding powerhouse.

India's Ship Recycling Leadership

Global Position

  • Market Share: Increased from 30.1% (2024) to 35.4% (2025)
  • Recycling Volume: 2.99 million Gross Tonnes (GT) of ships recycled
  • Growth Rate: Nearly 60% increase from previous year
  • Key Facility: Alang Ship Recycling Yard in Gujarat, world's largest, undergoing expansion to 9 million Light Displacement Tons (LDT)

Policy Enablers

Hong Kong Convention (HKC) Compliance:

  • Enactment of Recycling of Ships Act, 2019 aligned India with international standards
  • Government provided Rs 53 crore to modernize recycling yards
  • 115 facilities now internationally compliant

Ship-breaking Credit Note Scheme:

  • Provides ship owners credit equivalent to 40% of scrap value
  • Credit usable (up to 5% of vessel value) for building new ships at Indian shipyards
  • Creates direct linkage between recycling and domestic shipbuilding

Major Policy Initiatives

Shipbuilding Financial Assistance Scheme (SBFAS)

  • Provides graded financial assistance of 15% to 25% of vessel cost
  • Offsets cost disadvantages against subsidized foreign competitors
  • Establishes National Shipbuilding Mission
  • Expected to support Rs 96,000 crore worth of shipbuilding projects over next decade
  • Operational until 31st March 2036 with extension up to 2047

Shipbuilding Development Scheme (SbDS)

  • Focuses on expanding India's shipbuilding capacity through:
  • Greenfield shipbuilding clusters
  • Modernization of existing shipyards
  • India Ship Technology Centre at Indian Maritime University (Tamil Nadu)
  • 100% capital support for common infrastructure in greenfield clusters
  • 25% capital assistance for brownfield expansion
  • Credit Risk Coverage Framework for improved project financing

Maritime Development Fund (MDF) - Rs 25,000 crore

  • Maritime Investment Fund (MIF): Rs 20,000 crore equity-based fund (49% government participation)
  • Interest Incentivization Fund (IIF): Rs 5,000 crore grant-based fund to subsidize borrowing costs
  • Sagarmala Finance Corporation Limited (SMFCL): India's first dedicated NBFC for maritime projects

Green Initiatives

  • Green Tug Transition Programme (GTTP)
  • Harit Nauka Guidelines mandating alternative fuels (LNG, battery-electric, hydrogen, methanol)
  • EU listing application for Indian ship recycling yards

India-South Korea Strategic Partnership

VOYAGES Framework

Under India-ROK Comprehensive Framework, South Korea supports:

Mega Shipyard Development:

  • First mega greenfield shipyard at Thoothukudi
  • Planned capacity: 2.5 million GT
  • Potential to create ~15,000 direct jobs

Technology Transfer:

  • HD Hyundai, Samsung Heavy Industries, Hanwha Ocean transferring expertise in:
  • Ship design and automation
  • Green propulsion systems
  • High-value vessel construction

Supply Chain Localization:

  • KOMEA (Korea Marine Equipment Association) with 300+ enterprises
  • Mumbai presence to promote domestic marine equipment production

Defence and Skill Development:

  • Naval and amphibious vessel manufacturing under Make in India
  • Partnerships with KOICA, IMU, and Korea Maritime & Ocean University (KMOU)

Key Challenges

Structural Deficits

  • Capacity Gap: India handles 95% trade volume by sea but has only 0.072 million GT shipbuilding capacity
  • Global Ranking: 18th position with less than 1% global output
  • Market Monopolization: China, South Korea, Japan control 95% of new orders

Financial Constraints

  • High Interest Rates: 10-10.5% domestic rates vs 4-8% in competitor nations
  • Working Capital: Requires 25-35% of vessel cost as working capital
  • No Sovereign Refund Guarantees: Limits international bidding capacity

Ecosystem Weaknesses

  • Import Dependency: 60-70% of critical components imported
  • Fragmented Supply Chain: Unlike South Korea's integrated Ulsan cluster
  • Infrastructure Limitations: Most Indian dry docks under 310 meters; cannot construct ULCCs or mega container ships

Demand and MRO Deficits

  • Weak domestic demand due to preference for second-hand foreign vessels
  • Less than 1% share in global MRO market
  • Indian vessels divert to Singapore, Dubai, or Colombo for servicing

Human Capital and Regulatory Challenges

  • Critical shortage of specialized marine engineering skills
  • Regulatory inconsistencies and complex land acquisition processes

Strategic Recommendations

  1. Ulsan Model Replication: Holistic, cluster-led development approach
  2. Circular Economy Integration: Leverage steel from ship recycling for new construction
  3. Conditional Technology Transfer: Mandate local value-addition and skill development
  4. Supplier Localization: Reduce import dependency within SPV clusters
  5. Green Technology Leapfrogging: Capture emerging markets for hydrogen fuel-cell and methanol/ammonia propulsion
  6. Right of First Refusal (RoFR): Strict enforcement for Indian-built vessels in PSU tenders

Vision 2030 and 2047

  • By 2030: Rank among top 10 global shipbuilding nations
  • By 2047: Achieve top 5 status with 4.5 million GT annual capacity
  • Generate up to 30 lakh jobs with multiplier effects on steel and electronics sectors

Conclusion

Strengthening the shipbuilding sector—the "mother of heavy engineering"—is both an economic and strategic imperative. Through Aatmanirbhar Bharat principles, massive capital outlays, and strategic international partnerships, India is positioned to transition from a maritime logistics consumer to a sovereign, world-class shipbuilding producer.