India’s budget sets aside almost USD 2.9 billion for shipyard development

India will establish a Rs 25,000 crore (USD 2.9 billion) Maritime Development Fund (MDF) to finance the shipbuilding and repair industries, as well as a new credit note system to support the shipbreaking industry.

India’s Government will cover 49% of the subsidy, in a move aimed at increasing India’s shipyard capacity. It is hoped that the reopening and redevelopment of yards in India can undermine Chinese dominance in the sector. Movements from South Korean shipyards recently imply they, too, are poised to invest in India.

Under the new scheme, an owner scrapping their vessel in an Indian shipyard will be entitled to a credit note of 40% of the vessel’s scrap value, which can be redeemed when ordering a new ship in Indian shipyards.

The ship recycling sector has seen weak demand and low prices going into 2025, with a low steel price thanks to a surge in exports of cheap steel from China throughout 2024. Actual production of Chinese steel decreased to a five-year low on the back of weak domestic demand, however, and the shipping industry is understood to be poised on the lip of a scrapping bonanza with the ending of the Red Sea crisis – meaning that India could be in prime position to take advantage.

“This budget not only strengthens business and trade sentiment but also acts as a springboard for economic expansion, capacity building, and solution-driven holistic development of the society and growth of the economy,” said India’s Minister of Ports, Shipping & Waterways, Shri Sarbananda Sonowal. “By unlocking value and enriching national assets, it lays the foundation for sustained progress and people-centric development. The budget aims to generate wealth, drive welfare initiatives, and foster public participation in nation-building.”