Govt likely to announce infrastructure status for shipping industry in two weeks

Infrastructure status would help shipping firms access cheaper, longer-term bank funding, spurring purchases from Indian shipyards and boosting domestic vessel ownership, they added.

The move is seen as crucial to India’s ambition of becoming one of the world’s top five countries in shipbuilding and ownership by 2047. It currently ranks 18th in ship ownership and 22nd in shipbuilding.

The department of economic affairs (DEA) and the ministry of ports, shipping, and waterways (MoPSW) have held three rounds of discussions to finalise the details of the decision.

“The DEA had earlier sought clarifications on the definition of vessels eligible for infrastructure status, whether the benchmark should be based on size or value,” said one of the people cited above. “In most sectors, infrastructure status is defined by value thresholds. But in this case the government is inclined to use vessel size, with ships 24 metres and longer likely to be covered,” this person added.

Levelling the playing field

Indian shipowners are at a disadvantage to foreign competitors, who enjoy access to long-tenure, low-cost funding. Infrastructure status would bridge this gap by aligning repayment schedules with the 12-15 year economic life of vessels, supporting fleet expansion under the Indian flag, and reducing operating costs, said the second person cited above.

India’s shipbuilding firms already have access long-term project loans at low rates, in line with the economic life of their assets.

Anil Devli, CEO of the Indian National Shipowners’ Association (INSA), said infrastructure status would allow Indian shipping companies to acquire more ships for coastal and global operations while easing cash flows by aligning repayments with the 12-15 year life of vessels.

“Currently, our foreign competitors have access to low-cost funds. Once we get funds at competitive rates and terms, it will promote the acquisition of ships and offshore rigs, and expand the country’s maritime footprint,” Devli added.

The move would also “complement other policy measures under consideration, including an extension of the shipbuilding financial assistance policy (SBFAP) beyond its current 2026 deadline, and a proposed ₹25,000-crore maritime development fund to boost domestic capacity,” said the second person cited above.

SBFAP is a capital subsidy scheme for shipyards. Slated to ending in March 2026, it provides financial support for contracts signed between 1 April 2016 and 31 March 2026, with assistance tapering from 20% in 2016 to 11% in 2026.

Less than 1% market share

India currently has about 1,550 registered vessels with a combined capacity of 13.5 million gross tonnage (GT), accounting for less than 1% of the global shipbuilding market. The sector is currently dominated by China, South Korea and Japan.

Under its Vision 2047 plan, the government aims to raise domestic ship ownership to 100 million GT and increase shipbuilding capacity to 4.5 million GT per annum, which would put India among the world’s top five maritime powers.

Spokespersons of the ministry of finance and MoPSW did not respond to Mint’s emailed queries.

MoPSW has already proposed including coastal shipping in the harmonised master list (HML) of infrastructure to make the sector eligible for various concessions and help attract cargo and passengers to this mode of transport. While presenting the Union Budget for 2025-26 in February, finance minister Nirmala Sitharaman said ships above a specified sise would be included in the HML.

This means all purchases of such ships would qualify for the same benefits currently available to shipbuilders, mainly easier access to long-term loans at lower interest rates.