The Hindu Editorial Analysis
27 September 2025
Upgrading shipyards
(Source – The Hindu, International Edition – Page No. – 8)
Topic : GS 3: Infrastructure
Context
Promotional incentives should provide assurance of long-term ship utilization contracts.
Introduction
The government’s ₹69,725 crore shipbuilding package aims to revitalise India’s maritime ecosystem by expanding merchant ship capacity to 4.5 million gross tonnage. It seeks to upgrade shipyards, promote ancillary clusters, and support shipowners with financing. The plan addresses India’s lagging shipbuilding capabilities despite past defence orders and previous policy failures.
New Shipbuilding Package: ₹69,725 Crore
- The government announced a ₹69,725 crore package to revitalise India’s shipbuilding and maritime ecosystem, replacing the 2015 package set to expire in March 2026.
- Over the last decade, while defence orders kept some yards busy, only around half a dozen small merchant ships were built in India.
- India’s capacity for large merchant ships remains very low, and the new package aims to increase it to 4.5 million gross tonnage.
- Key objectives:
- Upgrade shipyards with modern technology and management practices.
- Promote new shipyards in clusters, including factories for shipbuilding ancillaries.
- Support shipowners in financing new builds.
- Challenges: The earlier package largely failed, raising questions about the success of this new initiative.
Global Shipbuilding Practices
- Countries like South Korea, Japan, and China use advanced methods:
- Prefabrication of large ship components outside the dry dock.
- Components moved into dry docks using cranes of 1,000 tonnes or more.
- Dry docks function as assembly lines, drastically reducing construction time.
- Globally, keel-to-waterborne takes just 3–4 months, and a large ship can go from first steel to sea trials in ~1 year.
Challenges in Indian Shipyards
- Most Indian shipyards lack length, crane capacity, and space for prefabrication and modern assembly lines.
- Ancillary industries (suppliers of components) are insufficient, creating bottlenecks.
- Typical construction time in India is 2–3 years, delaying returns on capital.
- This has discouraged shipowners from ordering new builds despite previous subsidies.
- Shipyard upgrades under the new package aim to address these constraints.
Strategic Steps for India
- India must start small, focusing initially on ships of 500 gross tonnage and above.
- Declaring ship newbuilds as infrastructure reduces financing costs, but this currently benefits only large vessels.
- Long-term incentives should include:
- Assured offtake contracts for ships.
- Time charters and long-term shipping agreements (e.g., for imported coal or crude).
- Missed opportunities: Green fuel projects in Kakinada and Kochi were not leveraged to build green ships or secure long-term offtake.
Key Takeaways
- Upgrading shipyards is essential to reduce construction delays and cost overruns.
- Infrastructure-level incentives alone are insufficient without long-term demand visibility for shipowners.
- Integrated planning—modern shipyards + trained manpower + guaranteed offtake—is needed for India to compete globally.
Conclusion
The success of India’s shipbuilding package hinges on modernised shipyards, advanced technology, and trained manpower. Equally crucial are long-term offtake agreements and integration with green fuel initiatives. Without these, delays, cost overruns, and limited investor confidence may persist, restricting India’s ability to compete in the global merchant ship market and achieve the target of 4.5 million gross tonnage.