Introduction

The Union Budget 2025-2026 has placed a strong emphasis on strengthening India’s maritime industry. With a focus on shipbuilding, infrastructure development, and logistics efficiency, the budget aims to position India as a global maritime powerhouse. The government has announced the creation of a Rs 25,000-crore Maritime Development Fund (MDF), which will provide long-term, low-cost financial support to shipbuilding and blue water infrastructure projects.

Investment and Global Outreach

To attract investors, the Union Ports, Shipping, and Waterways Ministry will organize investor meets and roadshows in the US, Europe, and key Asian markets. The goal is to bring in pension and sovereign wealth funds to participate in the fund. The MDF is designed to provide diverse financial support, including debt, equity, viability gap funding (VGF), and buyer credit.



Key Announcements in the Budget

Maritime Development Fund (MDF): A dedicated financial institution to support shipbuilding and maritime infrastructure.

Revamped Shipbuilding Financial Assistance Policy (SBFAP): Addressing cost disadvantages in the shipbuilding sector.

Extension of Customs Duty Exemption: Waiver on raw materials, components, consumables, and parts used in shipbuilding for another 10 years.

Tonnage Tax Expansion: Inclusion of inland vessels under the Indian Vessels Act, 2021, to promote inland water transport.

Ship Recycling Credit Note Scheme: A credit note equal to 40% of the scrap value for fleet owners who recycle ships in India.

Subsidies for Shipyards: Up to 30% subsidy for building green vessels and special category ships.

PM Gati Shakti Expansion: Enhanced digital infrastructure for logistics and trade.

Transformation of India Post: Aiming to create a large public logistics organization.

Maritime Development Fund (MDF) and Its Impact

The Maritime Development Fund (MDF) will function similarly to the National Bank for Financing Infrastructure and Development (NaBFID) but will exclusively focus on the maritime sector. Initially, the MDF was proposed as a vertical under NaBFID; however, considering the specialized nature of the maritime industry, a dedicated fund was deemed necessary.

The primary objectives of the MDF include:

Promoting indigenous shipbuilding: Currently, India has less than 1% share in the global shipbuilding market, which is dominated by China, South Korea, and Japan. The MDF aims to change this by encouraging domestic manufacturing.

Reducing dependency on foreign ship leasing: India spends nearly $75 billion annually on leasing ships from other countries.

Providing long-term financial support: Loans extending up to 15-25 years to align with the 30-year lifespan of vessels.

Encouraging private participation: The government will contribute up to 49%, while the rest will be mobilized from state-owned ports and private investors.

Shipbuilding and Infrastructure Development

The government has also proposed measures to strengthen shipbuilding clusters and facilitate additional infrastructure development. Large ships above a certain size will now be considered part of the infrastructure category, ensuring better financial support.

Key financial assistance under Shipbuilding Financial Assistance Scheme 2.0:

20% subsidy for constructing normal ships.

25% subsidy for oil, gas, chemical tankers, and container ships.

30% subsidy for green vessels and futuristic technology-based ships.

The scheme will be operational until March 2035, with a possible extension up to 2047, providing long-term visibility for shipbuilders and investors.

Boosting Cruise Tourism and Port Expansion

Apart from shipbuilding, the MDF will also focus on promoting cruise tourism by developing the necessary infrastructure. The fund will support:

Mechanization and capacity expansion of existing ports through public-private partnerships (PPP).

Dredging activities to improve navigability.

Development of inland waterways and coastal shipping to enhance cargo movement efficiency.

Industry Leaders on the Budget

Several industry experts have expressed their views on the maritime-focused budget:

Gayomard Driver, Executive Director & CFO, Jeena and Company: “This budget reaffirms the government’s commitment to infrastructure development, particularly in logistics and digital transformation, which will be a game-changer for India’s supply chain ecosystem.”

Dhruv Taneja, Founder & CEO, MatchLog Solutions: “Expanding shipbuilding capacity and setting up the Maritime Development Fund are crucial steps. However, improving container movement, intermodal logistics, and digital freight solutions must also be prioritized for effective results.”

Ketan Kulkarni, MD, Gati Express and Supply Chain Ltd.: “Making PM Gati Shakti data accessible to private players will improve collaboration and efficiency in infrastructure projects, accelerating logistics growth.”

Saahil Goel, MD & CEO, Shiprocket: “Transforming India Post into a large logistics organization will empower local businesses and artisans by expanding eCommerce beyond urban centers.”

Conclusion

The Budget 2025-2026 is a landmark step toward transforming India’s maritime industry. With the Maritime Development Fund, shipbuilding incentives, infrastructure expansion, and logistics enhancements, India is set to strengthen its presence in the global maritime sector. While execution remains key, these initiatives will drive growth, reduce dependence on foreign ships, and create a robust shipping and logistics ecosystem. If implemented effectively, India’s ambition to become a global maritime power will soon turn into a reality.

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