General Studies Paper-3

Context

• With less than 1% share in global shipbuilding currently, India is on course to be among the world’s top five countries in this arena by 2047.

About Shipbuilding

• Shipbuilding refers to the construction, repair, and maintenance of vessels used for transportation, defense, and trade.
• Shipbuilding is carried out in specialised facilities called shipyards, which are equipped to handle large-scale projects and complex assembly processes.
• Asia-Pacific was the largest region in the ship building and repairing market, accounting for 49% or $118.12 billion of the total in 2023.
• It was followed by Western Europe, North America and then the other regions.
• Currently, India holds only 0.06% of the global shipbuilding market, a stark contrast to the dominance of China, South Korea, and Japan, which collectively control 85% of the industry.

India’s Maritime Sector

• It currently contributes 4% to India’s GDP and just 1% of global tonnage, the vision is to raise its share to 12% of national GDP.
• India has a clear goal of ranking among the top 10 maritime nations by 2030 and among the top 5 by 2047 from the current position of 16th.
• Indian seafarers already represent 12% of the global workforce.
• India has a goal to expand this to around 25%, making shipbuilding and repair central to this transformation.
• The maritime sector handles 95% of India’s trade by volume, underscoring its pivotal role in the economy
• Cargo management at Indian ports rose by 4.45% in FY24, reaching 819.22 million tonnes.

Factors Favouring India’s growth of shipbuilding industry in India

• Strategic location: India’s extensive coastline and proximity to major shipping routes provide a natural advantage for shipyards, helping reduce transportation costs and turnaround times.
• Competitive labour costs: India offers a competitive edge with lower labour costs compared to other shipbuilding nations, making it an attractive option for international clients.
• Focus on niche segments: Indian shipyards are specialising in categories like offshore support vessels, dredgers, and ferries, targeting specific market demands.
• Government support: Policy initiatives such as the Scheme for Financial Assistance to Shipyards in India (SFAS) and a focus on enhancing indigenous shipbuilding capabilities are driving growth in the shipbuilding sector.

Challenges

• Infrastructure Gaps: Inadequate port infrastructure and outdated facilities at some ports, limiting capacity and efficiency.
• Congestion: High traffic volumes at major ports leading to delays, increased turnaround times, and reduced productivity.
• Environmental Concerns: Pollution and sustainability issues, including emissions from ships and port operations.
• Logistics Bottlenecks: Inefficient transport connectivity between ports, roads, and railways, impacting smooth cargo movement.
• Global Competition: Rising competition from other global maritime hubs, necessitates continuous investment and modernization.

Government Initiatives

• Sagarmala Programme: Focuses on leveraging India’s coastline and of navigable waterways.
• Supports port infrastructure, coastal development, and connectivity.
• Financial aid for projects like coastal berths, rail/road connectivity, fish harbours, and cruise terminals.
• Maritime India Vision 2030 (MIV 2030): Aiming for India to become a top 10 shipbuilding nation by 2030 and create a world-class, efficient, and sustainable maritime ecosystem.
  • Includes 150+ initiatives across ten key maritime sectors.
• Inland Waterways Development: 26 new national waterways identified by the Inland Waterways Authority of India (IWAI).
  • Provides alternative, sustainable transport, easing road/rail congestion.
• Green Tug Transition Program (GTTP): Aims to replace fuel-based harbour tugs with eco-friendly, sustainable fuel-powered tugs.
  • Transition to be completed by 2040 across major ports.
• Sagarmanthan Dialogue: An annual maritime strategic dialogue to position India as a global center for maritime conversations.
• Maritime Development Fund: ₹25,000 crore fund for long-term financing to modernize ports and shipping infrastructure, encouraging private investment.
• Shipbuilding Financial Assistance Policy (SBFAP 2.0): Aimed at providing direct financial subsidies to Indian shipyards to help Indian shipyards compete with global giants.
• The Cruise Bharat Mission: It was launched in 2024, aims to develop 100 river cruise terminals, 10 sea cruise terminals, and five marinas, while doubling passenger numbers by 2029.
  • The Indian Ports Act, 2025, replaced an old 1908 law, created a Maritime State Development Council for better national planning, gave more power to state maritime boards to manage smaller ports, and set up a way to resolve disputes at the state level.