India's maritime sector is set to receive a significant boost with the announcement of the Maritime Development Fund (MDF) in Budget 2025. Finance Minister Nirmala Sitharaman has earmarked ₹25,000 crore for long-term financing of the shipping, shipbuilding, and port infrastructure sectors, with the ambitious goal of attracting investments of up to ₹1.5 lakh crore by 2030.
This fund, coupled with a revamped Shipbuilding Financial Assistance Policy, customs duty exemptions, and new incentives for ship scrapping, is a transformative initiative aimed at reinforcing India's maritime ambitions. The policy is expected to enhance domestic shipbuilding, boost employment, and strengthen India's position in global trade.
What is the Maritime Development Fund?
The ₹25,000 crore Maritime Development Fund (MDF) will serve as a dedicated financial vehicle to:
Provide long-term, affordable financing to the shipping and shipbuilding industry.
Encourage port development, maritime logistics, and coastal infrastructure projects.
Reduce India's dependence on foreign shipping finance and promote self-reliance in the sector.
Support the expansion of India's merchant fleet, which currently lags behind global competitors.
The government will contribute 49% of the corpus, while the remaining 51% will be raised through private sector investments, port operators, and financial institutions.
Key Features of Budget 2025 for the Indian Maritime Sector
1. ₹25,000 Crore Maritime Development Fund (MDF)
Long-term, low-cost financing for Indian shipping companies and shipbuilders.
Financial support for upgrading shipyards, dry docks, and maritime logistics.
Encouragement for green and energy-efficient vessels, reducing carbon footprint.
Expected to generate ₹1.5 lakh crore in investments by 2030.
2. Customs Duty Exemptions Extended for 10 More Years
The customs duty exemption on inputs and components used for ship manufacturing will be extended for another decade.
Reduces the cost of production for Indian shipbuilders.
Encourages Make in India for the global shipping industry.
3. Revamped Shipbuilding Financial Assistance Policy (SBFAP 2.0)
₹18,090 crore outlay to provide direct financial subsidies to Indian shipyards.
Helps offset cost disadvantages faced by Indian shipbuilders in international markets.
Boosts competitiveness and ensures Indian yards can secure large global orders.
Strengthens India's indigenous shipbuilding industry and aligns with Atmanirbhar Bharat.
4. Shipbreaking Credit Notes for Circular Economy
A 40% Credit Note on the scrap value of old ships will be given for shipbreaking in Indian yards.
This can be reimbursed for purchasing new ‘Made in India’ vessels.
Encourages a sustainable, circular economy and promotes India as a global ship recycling hub.
5. Expansion of Tonnage Tax Scheme to Inland Vessels
The existing tonnage tax scheme, currently available only for sea-going vessels, will be extended to inland waterway vessels registered under the Indian Vessels Act, 2021.
Promotes inland water transport (IWT) as an eco-friendly and cost-effective mode of trade.
Helps reduce logistics costs, boosting trade across riverine and coastal areas.
6. Shipbuilding Clusters and Maritime Infrastructure Upgrades
Development of dedicated shipbuilding clusters with enhanced infrastructure, technology, and skill development.
These clusters will support new ship categories, including green energy vessels.
Large ships above a certain size will be included in the Infrastructure Harmonised Master List (HML), making them eligible for financial incentives.
Impact on the Indian Maritime Community
1. Boosting India's Shipbuilding Industry
India has long struggled to compete with global shipbuilding giants like China, South Korea, and Japan due to higher capital costs, lack of subsidies, and infrastructure bottlenecks. The MDF and SBFAP 2.0 directly address these challenges, making Indian shipbuilding:
More cost-competitive with international yards.
Attractive for domestic and international ship orders.
A significant employment generator, creating thousands of jobs in shipyards, ports, and allied industries.
2. Strengthening India's Shipping Fleet
India's merchant fleet carries less than 10% of its own trade, relying heavily on foreign shipping. The MDF will:
Enable Indian shipping companies to buy more vessels at competitive financing rates.
Increase India's global shipping footprint.
Help reduce the country's foreign exchange outflow on chartering foreign ships.
3. A Sustainable, Green Future for Indian Shipping
The emphasis on green, energy-efficient vessels aligns with India’s commitment to IMO’s decarbonization goals.
Ship recycling initiatives will help India retain its leadership as a global shipbreaking hub, particularly in Alang, Gujarat.
Encourages fuel-efficient and LNG-powered ships, reducing maritime carbon emissions.
4. Job Creation and Maritime Skill Development
With new shipbuilding clusters, there will be an increased demand for skilled maritime professionals.
Maritime training institutes will need to scale up courses for naval architects, marine engineers, and ship designers.
Inland water transport expansion will create new jobs in riverine trade and logistics.
5. Strengthening India's Role in Global Trade
India’s ports and maritime sector will attract foreign investments.
Logistics costs will decrease, making Indian exports more competitive.
Enhanced inland waterways will reduce pressure on roads and railways, improving connectivity.
Challenges and Road Ahead
While the Budget 2025 maritime initiatives are highly progressive, their success will depend on:
Effective implementation of MDF and ensuring its accessibility to smaller players.
Streamlining bureaucratic approvals to fast-track shipbuilding projects.
Ensuring timely disbursement of SBFAP 2.0 subsidies.
Collaboration between the government, private sector, and international players to bring in technology and expertise.
A Defining Moment for India's Maritime Ambitions
The Maritime Development Fund, shipbuilding financial assistance, tax exemptions, and ship recycling incentives mark a historic shift in India’s maritime policy. By focusing on domestic shipbuilding, inland water transport, and green energy ships, the Budget 2025 lays a strong foundation for a self-reliant and globally competitive Indian maritime industry.
With these strategic reforms, India is not just charting a course for economic growth but also solidifying its place as a maritime powerhouse in the decades to come. If implemented effectively, these initiatives can propel India towards achieving its vision of becoming a leading global shipping and shipbuilding hub by 2047.
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