【Text by Observer Net Columnist Da Yiwang】
Recently, the Indian government announced a shipbuilding industry support plan worth 70 billion rupees (about 8 billion US dollars), trying to replicate the "Maruti-Suzuki" type of Indian capital - foreign capital cooperation mechanism of the 1980s, with the goal of making India enter the top ten in the world's shipbuilding industry by 2030 and the top five by 2047, which is truly ambitious.
However, achieving this grand goal is not an easy task.
Indian Shipbuilding Industry: Once Glorious
Since India's independence, the development of the Indian shipbuilding industry has been very slow. Indian ships have long been at a low level and small tonnage stage. It was only in the first decade of this century that, with the pace of globalization, the Indian shipbuilding industry experienced a relatively good period of development, and the total value of ship exports once soared from less than 100 million USD to 1.1 billion USD. However, even in the most prosperous year of the Indian shipbuilding industry in 2011, its share of the global shipbuilding market was only 3.7%, and then began to gradually decline.
As for the current status of the Indian shipbuilding industry, it can only be said that it has "great potential." In 2024, the global shipbuilding orders held by India accounted for less than 0.2% of the total global orders, completely outperformed by China, South Korea, and Japan, the three major shipbuilding powers.
From the perspective of the types of ships that can be built, relying on external technical support, India has the capability to build large combat ships such as aircraft carriers, destroyers, and frigates in the naval shipbuilding field, especially the technology to manufacture conventional-powered submarines or even self-built nuclear submarines through license production. However, in the civilian shipbuilding sector, the technical level of Indian shipbuilding is quite low, and the types of ships that can be built are only low-technology ship types such as bulk carriers and fishing boats; but none of the ship types such as ultra-large oil tankers over 150,000 tons, LNG carriers, deep-sea work ships, and luxury cruise ships can be built. The largest oil tankers currently built by India (VLCC) have a tonnage of less than 100,000 tons.
"Kolkata" class destroyer
After the Modi government came to power in 2014, it once proposed the slogan of "reviving the Indian shipbuilding industry." Since 2015, the Modi government has frequently contacted China, Japan, and South Korea, hoping to introduce shipbuilding companies from these countries to set up operations in India, promoting the so-called "Make in India" strategy for the shipbuilding industry, but for a long time, the results have been slow and unremarkable. Until before the 2024 Indian Lok Sabha election, Prime Minister Modi reiterated in his "India 2047 Vision" the strategic goal of building India into a global "shipbuilding power," even proposing to ensure that India's shipbuilding industry enters the top five in the world by 2047. At this point, the new Indian "shipbuilding vision" of Modi's government was re-launched.
Before announcing this 70 billion rupee shipbuilding industry support plan, since 2025, India has already introduced some favorable policies for the shipbuilding and shipping industries, such as the establishment of the state-owned Bharat Container Corporation in early 2025, which is equivalent to China's COSCO, operating more than 100 container vessels through leasing and purchasing, to seize the world shipping market. The ambition is quite significant.
Shipbuilding Industry Support: What Are the Contents?
So, what are the contents of the shipbuilding industry support plan announced by the Modi government, which is approximately 70 billion rupees (actually 6972.5 billion)? What is the overall feasibility of the plan?
According to information from the Ministry of Ports, Shipping and Waterways (MoPSW), the core intention of this support plan is to improve long-term financing channels for the shipbuilding industry, support the construction of new shipyards, enhance technological capabilities, and establish legal safeguards, thereby boosting India's shipbuilding capabilities.
Under this overall concept, India intends to comprehensively enhance the shipbuilding industry's capabilities in the following aspects:
The first part is the Ship Building Financial Assistance Scheme (SBFAS), which provides direct financial support to shipyards, totaling 2473.6 billion rupees (approximately 19.8 billion RMB). According to the disclosed information, the scheme will be implemented until March 2036. According to the relevant disclosure, the plan stipulates that ships valued below 10 billion rupees will receive a 15% subsidy, while ships exceeding this threshold will receive a 20% subsidy. Additionally, if eco-friendly ships include 30% domestic value addition, they will receive a 25% subsidy. Moreover, there are corresponding policy supports for India's "flagship industry" of shipbreaking, as a financial incentive for India's local shipbuilding.
Shipbreaking is India's traditional advantage
The second part is the Maritime Development Fund (MDF), which provides effective financing channels and reduces debt costs for the shipbuilding industry, including a 2000 billion rupee (approximately 16 billion RMB) maritime investment fund, and a 500 billion rupee (approximately 4 billion RMB) interest incentive fund, directly targeting the long-standing problem of financing difficulties in the Indian shipbuilding industry, providing long-term funding support for the shipbuilding industry and reducing the financing cost of the shipbuilding industry.
The third part is the Shipbuilding Development Scheme (SbDS), whose main idea is to promote the development of shipbuilding clusters, improve operational efficiency and infrastructure within the industry, with a total amount of 1998.9 billion rupees (approximately 16 billion RMB). According to the plan, India plans to expand its domestic shipbuilding capacity to 4.5 million deadweight tons, build large shipbuilding clusters, establish shipbuilding technology centers under the banner of the Indian Maritime University, and fully promote the technological transformation and upgrading of the Indian shipbuilding industry.
The fourth part is related legal and institutional guarantees. The Indian government plans to emulate the defense sector and establish a unified National Shipbuilding Mission (National Shipbuilding Mission), to coordinate the promotion and implementation of the entire plan, improve the relevant legal framework, and smooth out bottlenecks and difficulties within the industry chain.
In summary, according to the Indian government's plan, this massive shipbuilding industry upgrade plan is expected to create 3 million jobs, attract 4.5 trillion rupees of funds into the maritime sector, and promote the realization of India's "2047 Vision".
Regarding the introduction of foreign shipbuilding industry and technological upgrades, India once again turned its eyes to Japan and South Korea. It is reported that the Indian government has once again extended an olive branch to Japan and South Korea, hoping that these two countries can set up factories in India and transfer shipbuilding technology. Of course, the relevant negotiations are still in the early stages.
Looking at the package of shipbuilding industry support plans disclosed by the Indian MoPSW, it is somewhat clear about its own advantages and bottlenecks. For a long time, the reason why the Indian shipbuilding industry has developed slowly is due to problems including shipyards as heavy asset and high technology industries, which require extremely high efficiency in related policy support, financing channels, and capital flow, otherwise it is difficult to meet the demands of the international shipbuilding market. Therefore, the Indian government's latest package of shipbuilding industry support plans focuses on subsidies for shipbuilding and facilitating financing for shipyards, which is indeed an effective measure to support the development of the shipbuilding industry.
At the same time, regarding the problem of low technical capabilities of India's own shipbuilding industry, the Indian government's solution is the shipbuilding industry development plan, not only by the Indian Maritime University to improve its shipbuilding technical level, but also planning to take on Japanese and South Korean shipbuilding technologies, which is equivalent to replicating the "Make in India" plan of the Modi government in the defense sector. These factors combined show that the Indian government has indeed made efforts to revitalize its shipbuilding industry.
Indian Shipbuilding: The Reality Is Very Harsh?
Although the Indian government has invested a lot of effort in its shipbuilding industry, and some policies have indeed targeted the pain points and challenges of the Indian shipbuilding industry, the gap between India and the success of the shipbuilding industry is still too large.
Firstly, India's comparative advantages are relatively single. In the view of the Indian government, one of the comparative advantages of developing the shipbuilding industry is the younger population structure. The average age of India's population is only 28 years old, compared to the average age of 40 years for the workforce in the shipbuilding industries of South Korea and Japan. From the perspective of population structure, the shipbuilding industries of Japan and South Korea have entered the sunset industry phase. With a younger population structure, India's labor cost reduction brings advantages, allowing the unit cost of shipbuilding per deadweight ton in India to be only 3,500 USD, while Vietnam and the Philippines cost 4,500 USD, and the United States and Europe cost as high as 11,000 USD.
Indian workers are young
Therefore, India believes that it can rely on its price advantage to compete for the shipbuilding market. However, Japan and South Korea can completely offset this through measures such as introducing automated equipment to increase labor productivity and reduce costs. For India, merely relying on a labor advantage can only replace the shipbuilding enterprises in similar ecological positions in Southeast Asia, and it is difficult to shake the strategic position of the major shipbuilding countries.
Secondly, India's technical level is backward. So far, India lacks the ability to build high-tech, high-value-added ships, and the ship types such as VLCC and LNG are blank in the Indian shipbuilding industry. Even the MoPSW, at present, can only think of realizing the independent manufacturing of bulk carriers and container ships, which means that India has never really intended to aim high and climb to the peak of shipbuilding technology.
As for diesel engines, navigation equipment, and other shipbuilding requirements, India has no independent manufacturing capability and must rely on imports. Once such key subsystems depend on imports, whether it is supply chain security factors, delivery schedule factors, or cost factors, they will bring more uncertainties, which may affect the delivery speed of Indian shipyards.
Again, the issue of R&D investment in India. To be honest, looking at the 60 billion rupee shipbuilding industry support plan that India has publicly announced, the funding is not much. Assuming that a ship worth 20 billion rupees is subsidized by 20% (4 billion rupees), it is even not enough to cover the cost. And the 1998.9 billion rupees used to upgrade the national shipbuilding bases is just a drop in the bucket.
As a comparison, in June 2022, the official website of the Shanghai Municipal Government published the "Implementation Plan for Focusing on the Lingang Core Area to Build Shanghai 'Global Power City'", aiming to develop our own large marine engines, build a ship propulsion research and development base and a national-level manufacturing innovation center. It requires that by 2025, a cumulative investment of more than 100 billion RMB in major projects in the propulsion industry should be achieved; cultivating more than 5 leading enterprises with hundreds of billions of scale, and more than 50 "specialized, refined, unique, and innovative" industrial chain supporting enterprises, building a safe and resilient industrial chain; helping the key core technologies of the industry to accelerate independent innovation, building 3-5 national or municipal-level manufacturing innovation centers, and more than 10 industrial innovation platforms, cumulatively achieving R&D funding investments of over 100 billion RMB — that is, for the development of ship engine, we only need one city to invest at least 100 billion RMB in four years. While India is planning to invest 2000 billion rupees (16 billion RMB) to achieve the overall upgrading of the shipbuilding industry, this is nothing short of a dream.
In summary, this shipbuilding industry upgrade plan of India, to some extent, does reflect the intention of the Indian government to catch up with the international advanced level in the shipbuilding industry and compete for market share. But it's idealistic, the reality is harsh — it's probably a high probability event that the expected goals cannot be achieved.
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