A staggering $75 billion flows out of India's economy every year, not as an investment or aid, but as freight charges paid to foreign shipping lines. This colossal sum, which Prime Minister Narendra Modi highlighted as exceeding the national defence budget, underscores a profound paradox: a nation with a glorious maritime history now finds itself a marginal player on the global shipping map.
The Stark Reality: A Faded Maritime Power
The divergence in fortunes is perfectly illustrated by two companies born in the same year, 1972. South Korea's HD Hyundai Heavy Industries has grown into the world's largest shipbuilder, with a revenue of $9.85 billion in 2024 and delivery of its 5,000th vessel recently. In stark contrast, India's largest shipbuilder, Cochin Shipyard Ltd (CSL), reported revenue of about $550 million in 2024-25 and has built only 241 vessels in its entire history.
India's share in global shipbuilding output is a mere 0.06% by gross tonnage, ranking it 20th worldwide. In ship ownership, it stands 22nd with a 0.7% share. Of the approximately 60,000 oceangoing cargo vessels globally, only 1,150 are registered in India. Consequently, foreign ships carry 92% of India's total trade, exposing a critical strategic vulnerability.
Wake-Up Calls and a Bold Policy Response
A series of global crises jolted the Indian establishment into action. The COVID-19 pandemic disrupted supply chains, leaving Indian exporters stranded as foreign vessels avoided Indian ports. The Russia-Ukraine war and subsequent sanctions complicated crude oil logistics. Most recently, the Red Sea crisis forced rerouted ships on longer voyages, yet India lacked a sufficient domestic fleet to capitalise on the situation.
Recognising that 95% of India's cargo by volume and 70% by value moves via sea, the government has launched an ambitious policy overdrive. The immediate roadmap is the Maritime India Vision 2030, while the long-term goal is defined by the Maritime Amrit Kaal Mission 2047. The objective is to catapult India into the world's top five shipbuilding nations, bolstered by robust ship repair and dismantling ecosystems.
A significant ₹69,725 crore revival package was announced in September 2025 to incentivise shipbuilding and vessel ownership. This includes granting infrastructure status for large ship construction to ease access to long-term, low-cost funds.
Roots of Decline and the Path to Revival
Historians like Sanjeev Sanyal, a member of the PM's Economic Advisory Council, note that India ceded its maritime dominance around the 12th century. The Industrial Revolution delivered the next blow, shifting shipbuilding from wood to steel—a transition where colonial Britain used India for raw materials but built ships at home. Post-independence, shipbuilding, the 'mother of heavy engineering,' remained neglected as governments focused on other priorities.
Meanwhile, Japan, South Korea, and China strategically prioritised shipping. Japan used it for post-war reindustrialisation, South Korea followed in the 1970s, and China in the 1990s, backed by massive state subsidies. Today, China commands 55% of global shipbuilding capacity, followed by South Korea (28%) and Japan (13%).
The Indian paradox lies in its proven capability to build advanced defence vessels—like the aircraft carrier INS Vikrant from CSL or stealth frigates from GRSE—while remaining uncompetitive in commercial shipbuilding. As Arun Ramchandani of L&T's defence business points out, commercial contracts are brutal, demanding a strict balance of time, cost, and quality—a 'golden triangle' where Indian yards struggle against the scale and efficiency of Chinese and Korean giants.
Building the Ecosystem: The '1987 Moment' for Shipbuilding
Industry experts compare India's current shipbuilding state to its automobile industry in 1987, before Maruti Suzuki's entry revolutionised manufacturing practices and the component ecosystem. Nagesh Krishna Moorthy of CSL highlights key challenges: high man-hours per tonne due to negligible automation, lack of modular construction techniques, and a weak domestic supply chain where 70% of a ship's cost is imported equipment.
The revival package aims to tackle these by subsidising cost disadvantages and creating industrial clusters. A timely opportunity is emerging as ageing populations in Japan and South Korea push companies to relocate production while retaining design expertise at home. HD Hyundai has already announced a $2 billion shipyard in Thoothukudi, Tamil Nadu, and Samsung is reportedly in talks with Indian yards like GRSE.
To generate domestic demand, the government has mandated that public sector oil and fertilizer companies own 30% of their fleet requirement, creating an immediate need for about 214 ships. Simultaneously, efforts are on to revive the Shipping Corporation of India and address policy hurdles like the 5% GST on imported second-hand vessels and higher operational costs that put Indian shipowners at a 19.2% disadvantage.
The mission is monumental. As the traditional wooden vessel INSV Kaundinya sets sail to retrace ancient trade routes, symbolising a rich past, India's journey to reclaim its maritime future will demand sustained policy focus, global partnerships, and building a competitive ecosystem from the ground up. The $75 billion drain is a stark reminder of the cost of inaction, and the clock is ticking to catch the shipbuilding bus it missed decades ago.
