Visakhapatnam: When the government unveiled the Shipbuilding Financial Assistance Policy (SBFAP) in 2016, it spoke of nothing less than a maritime renaissance. The scheme promised to “place India among the top shipbuilding nations in the world” by providing ₹4,000 crore in subsidies over a decade (2016–2026). Shipyards were expected to expand capacity, win global orders, and anchor India’s ambitions of becoming a shipbuilding powerhouse.
Nine years later, the results tell a very different story.
Lofty Goals, Limited Delivery
The SBFAP was billed as a game-changer. Assistance rates of up to 20% were offered on ship contracts, tapering down to 11% by 2026. The scheme was meant to: Generate large-scale employment, Catalyse commercial ship exports, and Complement India’s growing naval self-reliance.
Yet, parliamentary replies and official press releases show that between 2016 and 2024:
- Only ₹385.16 crore was actually disbursed,
- Barely 9.6% of the total outlay,
- Spread across just 144 vessels,
- With only 19 shipyards availing assistance out of 45 registered.
For context, global competitors like China and South Korea pump in multi-billion-dollar subsidies each year, sustaining merchant shipyards that dominate over 90% of global market share. India, by contrast, remained stuck at 0.06% share of global shipbuilding.
In fact, India’s global share in shipbuilding has declined- slipping from around 0.15% in 2014 to barely 0.06% by 2023, even as China, South Korea and Japan consolidated their dominance.
A Drop in the Ocean: India’s share in Global Shipbuilding
Country |
Global Share |
|
China |
47% |
|
South Korea |
30% |
|
Japan |
18% |
|
Philippines |
1.5% |
|
Vietnam |
1% |
| India |
0.06% |
Why Did SBFAP Fail?
Industry insiders point to cumbersome documentation, slow approvals, and poor synchronization with shipbuilding cash cycles. The diminishing subsidy rate further reduced appeal, while the scheme lacked long-term financing or risk cover.
“The intent was right, but execution was lethargic. Shipyards couldn’t access support when they needed it most, and global buyers looked elsewhere,” said a senior maritime analyst.
By the time amendments in 2023 introduced incentives for green vessels, much of the decade had already been lost.
Defence Ships Progressed, But Commercial Orders Stalled
To be sure, India did make strides in naval construction. The commissioning of INS Vikrant (2022) and steady production of destroyers, frigates and patrol vessels reflect growing defence capability. But in commercial shipbuilding, the sector SBFAP was designed to unlock, progress has been negligible.
Domestic yards largely remained confined to tugs, dredgers, and small coastal vessels. Mega orders for tankers, LNG carriers or container ships never materialised.
Government Admits Reset is Needed
The dismal record of SBFAP forms the backdrop to the Union Cabinet’s decision (September 2025) to approve a ₹69,725 crore, 11-year package for revitalizing shipbuilding and the wider maritime ecosystem.
The new framework introduces:
- A revamped Shipbuilding Financial Assistance Scheme (₹24,736 crore),
- A Maritime Development Fund (₹25,000 crore) with long-term debt and interest support,
- A Shipbuilding Development Scheme (₹19,989 crore) for clusters, insurance, and technology, and
- Oversight by a National Shipbuilding Mission.
Officials insist the mistakes of 2016–2026 will not be repeated.
Lessons From a Lost Decade
The failure of SBFAP is a sobering lesson:
- Lofty goals without effective execution and financing mechanisms can leave India’s industry stranded,
- A decade of opportunity was lost even as global competitors surged ahead,
- Only defence shipbuilding saw tangible success, while commercial yards languished.
As India commits nearly ₹70,000 crore till 2036, the maritime sector faces a pivotal test. Can the country finally translate policy ambition into global competitiveness or will history repeat itself?
For now, the shipbuilding community is watching closely, aware that India cannot afford another lost decade.
