Commercial shipbuilding: Beyond a sectoral revival, India’s chance to strengthen economic power & global influence

For a country that contributes less than 1% to global shipbuilding output, aspiring to join the coveted league of the top five global shipbuilders within the next two decades may appear audacious. Yet for a nation frequently described as one of the brightest economic spots for its resilience amid a pandemic and repeated geopolitical disruptions, such ambition reflects foresight and a determination to create enduring value. India’s aspirations of becoming a global superpower cannot be realized if it remains merely a maritime spectator.

Shipbuilding is often called the “Mother of Heavy Engineering” because of its multiplier effect on industrial growth and manufacturing. More accurately, it can be described as the “Mother Industry of Global Influence.” Asian powerhouses such as China, South Korea, and Japan - which together account for over 90% of global commercial shipbuilding output - demonstrate how the industry can underpin trade supremacy and geopolitical influence.

Consider South Korea. In the early 1970s, it made shipbuilding a cornerstone of national growth to mitigate vulnerabilities stemming from limited natural resources, capital, and technological depth. The result was scale in steel production, mastery in precision engineering, and the rise of globally competitive conglomerates that continue to enhance the country’s economic weight.


Japan’s shipbuilding ascent was shaped by post - World War II reconstruction. The industry became central to rebuilding the nation’s economy, fostering excellence in precision engineering, quality control, and operational discipline. The ripple effects strengthened adjacent sectors such as automotive, electronics, and advanced machinery - capabilities that continue to define Japan’s industrial reputation.

China’s rise in shipbuilding was deliberate and strategic. In just two decades, it transformed itself into the world’s largest shipbuilding nation, now contributing more than half of global output. This scale has enabled China to exert considerable influence over global supply chains and trade relationships.

India’s trajectory has been different. While defence shipbuilding gained prominence, commercial shipbuilding remained largely stagnant until the mid-2010s. Successive global disruptions compelled policymakers to reassess the strategic gaps in India’s industrial framework. Over the past five years, however, clear government intent and accelerated policy formulation have revived commercial shipbuilding, positioning it to compete globally.

This moment represents more than a sectoral recovery - it signals a strategic shift. In a world that reacts instantly to disruptions, maritime capability is no longer optional; it is foundational to economic and trade influence.

The urgency becomes clearer when viewed through India’s trade lens. Nearly 95% of India’s merchandise trade by volume and 70% by value moves via sea. Without a robust domestic shipbuilding industry, India effectively imports ships to export its goods - subsidizing foreign shipyards, generating employment abroad, and enabling other nations to build engineering expertise. In doing so, it cedes not only economic opportunity but also soft power in shaping trade and geopolitical relationships.

The vulnerability extends to energy security. More than 85% of India’s crude oil and a growing share of natural gas imports arrive by sea to meet the demands of 1.4 billion people. In periods of geopolitical strain, reliance on foreign-built vessels and external capacity becomes a strategic risk.

The Journey Ahead: Navigating Challenges and Seizing Opportunity
Several structural challenges have already been addressed through decisive policy action. The Shipbuilding Financial Assistance Policy, the ₹69,725 crore stimulus package, and the granting of infrastructure status to large vessels, have infused confidence in private players and reduced anxiety around the sector’s inherent cyclicality.

Yet shipbuilding remains capital-intensive and vulnerable to downturns. Any discontinuity in fiscal support could stall capacity expansion and deter long-term capital expenditure. Policy stability is therefore as critical as policy intent.

Interest rate parity with Asian peers is another essential requirement. Competitive financing determines global competitiveness. Without it, Indian shipyards struggle to match international pricing benchmarks, regardless of quality or capability.

Equally important is building clear domestic order visibility. A predictable pipeline provides business certainty, encourages capacity expansion, and strengthens resilience during global slowdowns. In parallel, strengthening domestic capabilities in engines and critical components must move from aspiration to execution. Policy incentives that have successfully catalyzed other sectors should be extended expeditiously to shipbuilding.

Anchoring Shipbuilding into India’s Future
The opportunity ahead is significant. While India’s software engineering talent enjoys global recognition, its heavy engineering base has gradually weakened. Shipbuilding - a precision-driven, high-skill industry - offers a pathway to revitalize that capability and create high-value employment aligned with India’s demographic dividend.

As Japan’s experience illustrates, a thriving shipbuilding sector uplifts adjacent industries. A maturing maritime ecosystem can catalyze offshore energy, renewables, port infrastructure, marine logistics, and advanced manufacturing. Heavy engineering depth strengthens economic sovereignty.

India need not replicate the volume-driven models of its Asian counterparts. Instead, it can focus on specialized and future-ready segments: offshore and niche commercial vessels, ship repair and lifecycle services strategically located along major trade routes, and energy-efficient vessels that align with the global decarbonization agenda - an area where capacity is still evolving worldwide.

Encouragingly, Indian shipyards are already earning international trust for complex vessel construction. The award of India’s first chemical tanker order from a prominent European shipowner signals the potential to carve out a differentiated “blue ocean” strategy in global shipbuilding.

Conclusion
For a nation poised to become the world’s third-largest economy by 2028 and determined to move up the value chain of global influence, the revival of commercial shipbuilding is both timely and strategic. This is not merely about industrial output; it is about economic leverage, energy security, technological depth, and geopolitical relevance.

India now has the opportunity to craft its own playbook - one that moves from legacy to longevity, and from participation to leadership in global shipbuilding.

The writer is Vivek Merchant, Director, Swan Defence and Heavy Industries Limited (SDHI).