India’s Shipbuilding Sector Set for Major Expansion
India’s defense shipbuilding industry is poised for significant growth, fueled by a surge in naval capital expenditure and a robust government policy initiative. A recent report from PhillipCapital reveals that the sector is currently managing projects worth over Rs 2.3 trillion, encompassing a wide range of naval vessels. The government’s ambitious Rs 697-billion Shipbuilding and Maritime Development Package aims to elevate India to a top-five global shipbuilding nation by 2047.
Transformative Government Initiatives
The newly announced Shipbuilding and Maritime Development Package represents the largest maritime stimulus in India’s history. This comprehensive initiative includes financial assistance, interest subventions, and refund guarantees, alongside the establishment of eight coastal shipbuilding clusters. These measures are designed to address long-standing cost and infrastructure challenges that have hindered India’s competitiveness against East Asian shipbuilding nations.
As of 2025, India’s shipbuilding output is primarily focused on defense vessels, ferries, and patrol craft, with limited involvement in large commercial projects. Despite ranking outside the top-15 globally in commercial shipbuilding by tonnage, India boasts a strong defense portfolio, with over 60 naval vessels currently under construction. This includes a variety of ships such as destroyers, frigates, corvettes, and submarines, highlighting the sector’s robust growth potential.
Naval modernization is identified as the key driver of growth in this sector. Fleet procurement spending is projected to nearly triple, reaching around Rs 244 billion in FY26, compared to Rs 93 billion in FY18. Additionally, spending on dockyards and projects is expected to double during the same period. With over 60 naval vessels under construction and plans for another 70-80, the overall naval modernization pipeline exceeds Rs 2.3 trillion, with 75% of defense procurement earmarked for domestic suppliers.
Indigenous Growth and Export Opportunities
Public sector shipyards, including Mazagon Dock Shipbuilders, Cochin Shipyard, and Garden Reach Shipbuilders & Engineers, are anticipated to be the primary beneficiaries of this expansion. These shipyards are supported by strong order visibility and a rising trend of indigenization in shipbuilding. The report indicates that indigenous content in frontline warships has increased significantly, transforming the navy’s role from merely a buyer of platforms to a systems integrator.
Furthermore, the report highlights a growing opportunity for defense exports. In FY25, defense exports reached ₹236 billion, bolstered by government-backed lines of credit to allied nations such as Mauritius, Vietnam, and Sri Lanka. Naval platforms and patrol vessels are increasingly recognized as scalable export products under India’s SAGAR (Security and Growth for All in the Region) doctrine, further enhancing the sector’s potential on the global stage.
