Emphasising the maritime sector as an engine for employment and economic growth is a policy plank that aligns well with atmanirbharta (self-reliance). Recently, while commissioning three indigenously built naval ships in Kolkata, Prime Minister Narendra Modi asserted that India would not “remain merely a buyer in the defence sector”.
He cited the induction of 33 ships and seven submarines into the Navy over the last decade, all but one built domestically. This includes the imposing INS Vikrant aircraft carrier and nuclear submarines like Arihant and Arighaat.
While the Indian Navy currently operates a 135-strong warship fleet, 39 of them, including eight destroyers and 12 frigates, were built by state-run Mazagon Dock. An earlier plan was to expand the fleet to 250 by 2035. However, despite some progress made in recent years, that target looks tall.
The policy thrust is not confined to rapidly expanding the naval fleet and indigenising warship manufacturing, but extends to accelerating the pace of commercial fleet development. The Union Budget 2025-26 unveiled a Rs 25,000-crore Maritime Development Fund to support domestic shipbuilding; the corpus may be enhanced to Rs 70,000 crore as need arises.
At present, 60 large ships are under construction in the country, with an investment of `1.5 lakh crore. This is impressive by historical standards. Shipbuilding investments are presumed to have a multiplier of two in economic circulation and six in employment creation.
Shipbuilding capacity is integral to the larger plan of easing and reducing logistics costs. Raising port capacity manifold and reducing the cargo turnaround time are complementary to this. Port-led development is being encouraged under the Sagarmala scheme.
The Bharatmala highway programme and PM GatiShakti master plan for multi-modal connectivity run in tandem. In 2020, India upended an archaic policy and freed tariffs at the 12 state-run major ports. This is already helping the creation of port-related infrastructure. Deepwater transhipment facilities may shift significant cargo processing volumes to Indian shores over the next few years.
Yet, a few statistics may be sobering. India’s container traffic of 20 million twenty-foot equivalent units (TEU), and port cargo capacity of 2,600 million tonnes are dwarfed by China’s 350 million TEU and 18.3 billion tonnes. The country owns less than 1,600 ships with gross tonnage of nearly 15 million; just about 490 of these vessels are used for overseas trade.
In comparison, China, with a massive 47% share in gross tonnage, dominates global ship ownership, and two other Asian countries — South Korea and Japan — follow it with tonnage shares of 29% and 17% respectively.
India’s share in ship ownership is a mere 1.2%. This is even less than its dismal share of 1.8% in global goods trade and compares poorly with 17.8% of Greece, 12.8% of China, and 10.8% of Japan. Only 0.77% of ships worldwide are registered under the Indian flag.
The sanctions on handling of Russian oil, and lately, the Hormuz crisis exposed how vulnerable our foreign trade is to the vagaries of global supply chains. Shipping costs skyrocketed for Indian exporters and importers because the West Asia war reduced vessel availability and inflated freight insurance premiums, and emergency surcharges.
Policies need to be buttressed further to curb the massive forex outflows on the purchase of ships built abroad. The plan to build 10 world-class shipyards and set up clusters of ship repair needs much higher domestic investments, skilling, and technology assimilation. More attractive terms for potential Asian investors could help.