Each Monday, CRG holds an Open House to review the
latest developments in the regulatory world. Our Experts offer their views for
Policy Guidance.
Sector discussed this week: Marine
A panel discussion was held by the CRG team focussing on Indian Maritime
and Shipbuilding sectors. The focus was on major infrastructure developments
taking place, growth opportunities and challenges faced in the sector. We also
analyze the major regulatory changes announced by the Government, and how they
could affect the sector.
Major Infrastructure development:
Maharashtra’s Dighi (along the Konkan coast of Maharashtra) to get
a ₹27,500 crore Shipbuilding
Cluster:
An MoU has been signed between Mazagon Dock Shipbuilders Ltd. and the Maharashtra
Maritime Board to develop a major Shipbuilding Cluster at Dighi, spread across
2,000 acres, with a 2.6 km coastline along the protected waters of Dighi Creek
with total investment ₹27,500 crore. Mazagon
Dock to serve as the anchor shipyard with ₹7,500 crore investment
From CRG some of the perspectives that emerged are
as follows:
1. Strategic growth and domestic challenges for the sector:
Lots of investments are coming into the ports and the ship building
sector. So, it is going to have a very strong manufacturing footprint on the
Indian economy. We are just exploring the sector in terms of what's happening,
to come up with more significant perspectives on these issues in coming months.
In fact, there's no regulatory centre which is even looking at the maritime
sector.
Continuing the discussion, another panellist emphasized upon the fact
that while shipbuilding can be the focus of manufacturing, it has some inherent
problems with it, especially if one does it in protected waters. And one of the
biggest issues is the emission of poisonous gas, as well as the environmental
factors that come into building a ship.
These could be major issues that could completely lay bare the
coastline. Second issue is where are the parts for the shipbuilding? India
doesn't indigenously make the parts for a ship. Even Mazagon Dock and Cochin Shipyard,
which are the two main shipbuilding hubs, do not source these parts
indigenously.
So, everything is imported, leading to a cost. So, it remains to be seen
how this is going to be effectively regulated. Another issue raised was – when
a ship built by an Indian shipbuilding company is sourced by a foreign company,
they use flags of convenience. So, it may not be the flag of their country, but
it could be the flag of a country which has very low regulation of ships. They
do this to avoid regulations. The panellist pointed out that the Indian
government should ensure that the manufacturers of these ships are not in any
way found liable for how those foreign buyers operate.
The reply given by one CRG member was that Bangladesh doesn't have a
shipbuilding industry per se. Indian ships reach Bangladesh, when they reach
their end of their lives. They are cut up into smaller vessels, and then ply on
Bangladesh-India waters. As an example, the total annual number of vessels that
ply between India and Bangladesh are about 650. Of this, around 620 are
Bangladesh vessels. None of these vessels are insured because they cannot be
insured due to the quality of the steel and other factors.
2. Government policies:
In reply to the earlier statement by a member raising concerns on
India’s indigenous manufacturing capabilities, another panellist notified about
the Rs
70000 Cr allocation that the Indian Government initiated for the industry to put
India among top shipbuilding nations. It covered 2 areas. One, for encouraging
indigenous manufacturing, where, through a Production Linked Incentive (PLI)
scheme the government provided fiscal incentives for localization of manufacturing.
And second, he opined, this also possibly addressed issues related to the flag
that ships will fly. The respected panellist confirmed the following:
Revitalizing India’s shipbuilding and maritime
ecosystem
In September 2025, the Union Cabinet approved a comprehensive package of
Rs.69,725 crore to revitalize India’s shipbuilding and maritime ecosystem. The
package introduces a four-pillar approach designed to strengthen domestic
capacity, improve long-term financing, promote greenfield and brownfield
shipyard development, enhance technical capabilities and skilling, and
implement legal, taxation, and policy reforms to create a robust maritime
infrastructure.
Under this package, the Shipbuilding Financial Assistance Scheme (SBFAS)
will be extended until 31 March 2036 with a total corpus of Rs.24,736 crore.
The scheme aims to incentivize ship building in India and includes a
Shipbreaking Credit Note with an allocation of Rs.4,001 crore. A National
Shipbuilding Mission will also be established to oversee the implementation of
all initiatives.
In addition, the Maritime Development Fund (MDF) has been approved with
a corpus of Rs.25,000 crore to provide long-term financing for the sector. This
includes a Maritime Investment Fund of Rs.20,000 crore with 49% participation
from the Government of India and an Interest Incentivization Fund of Rs.5,000
crore to reduce the effective cost of debt and improve project bankability.
Furthermore, the Shipbuilding Development Scheme (SbDS), with a
budgetary outlay of Rs.19,989 crore, aims to expand domestic shipbuilding
capacity to 4.5 million Gross Tonnage annually, support mega shipbuilding
clusters, infrastructure expansion, establish the India Ship Technology Centre
under the Indian Maritime University, and provide risk coverage, including
insurance support for shipbuilding projects.
3. Green shipping:
On the environmental issue affecting the sector, one member mentioned that
there's been a lot of conversations about the greenhouse gas emission
directions for maritime shipping. There have been proposals aiming for
significant reduction targets (such as 20% to 25%). As per him, shipping is a
huge contributor to greenhouse gas emissions. As he is involved with the India
Hydrogen Alliance, which includes partners like Cochin Shipyards Limited and
Maersk, he mentions India is very keen to participate in the bunkering
opportunities for green fuels.
Maersk has been experimenting with large-scale container ships which
have been essentially piloted on two different tracks. One is green methanol,
which is the easier one to handle. There is also green ammonia, which is
slightly more difficult to handle, but has a few other pros. So, this is one track
where IMO has put out some sort of draft proposals. While SAF (Sustainable
Aviation Fuel) has a well-defined structure ahead of the January 2027 mandates,
green shipping policies remain a crucial area for India to explore. India has
stepped back a little from its very aggressive green hydrogen related plans and
Ministry of Ports, Shipping and Waterways (MOPSW) plans. However, emerging international
green shipping routes (e.g., Singapore, Australia) could present lots of focus
area for Indian maritime policy.
4. Differing perspectives on Proposed Maritime
Regulations
In the latest developments, an article in Economic Times details a major
regulatory conflict between India's Maritime
Safety Authority, the DGMA, and domestic maritime stakeholders like
shipbuilders, safety experts, and insurers. Now, the core regulatory issues are
that the DGMA has issued a draft proposal to relax ship age regulations by:
● Removing upper/maximum age caps on commercial vessels
● Raising the entry age for second-hand vessels from 20
years to 25 years, that is allowing the entry of vehicles that are 25 years old versus the
mandated 20 years earlier.
● Seeking to drop the ‘Sustainability Indexing of Ships’
mechanism - that were originally meant to phase out older, polluting vessels.
Implications of such a move:
● Higher safety and environmental risks
through incorporating older ships
● Adverse policy & economic impact on
the demand for new ships, even as we seek to increase domestic shipbuilding
initiatives through Make in India, Maritime India Vision 2030, and Amrit Kaal
Vision 2047.
● Removing age limit would risk
turning the Indian shipping registry into a dumping ground for aging, low-quality, and high-emission vessels.
The CRG discussions this week, highlighted some of the major aspects of
the maritime sector – its strong growth potential, along with the key hurdles and
regulatory conflicts it faces.
