India's Domestic Shipping Expansion: ₹77,000 Crore Package and Maritime Strategy
Sanjeev Sanyal, Member of the Economic Advisory Council to the Prime Minister (EAC-PM), underscored that India's dependence on foreign vessels for over 90% of its trade is a "strategic weakness" requiring urgent correction.
The government has announced a ₹77,000 crore package to build a national fleet, boost domestic shipbuilding, and expand India's standing as a maritime power.
Policy priorities include domestic shipbuilding capacity expansion, port development, ship flagging, and coastal shipping infrastructure — all aimed at reducing freight payment outflows to foreign shipping companies.
West Bengal is identified as a key beneficiary due to existing maritime infrastructure (Garden Reach Shipbuilders, Kolkata and Haldia ports) and historical maritime tradition.
This initiative aligns with the broader Maritime India Vision 2030 (MIV 2030) and Maritime Amrit Kaal Vision 2047 frameworks.
India's Maritime Sector: Strategic and Economic Significance
India has a coastline of approximately 7,516 km (mainland: 5,422 km + island territories), 12 major ports and 200+ non-major (state/private) ports, and handles over 95% of India's international trade by volume and 70% by value through the sea. Despite this, India's share in global merchant shipping is tiny — less than 2% — meaning India pays enormous freight charges to foreign shipping companies. Over 90% of cargo carried to/from Indian ports is transported on foreign-flagged vessels, creating a persistent outflow of foreign exchange estimated at $75-80 billion annually. [Unverified — verify current figure]
The government's framing of foreign vessel dependence as a "strategic weakness" — not just an economic inefficiency — elevates maritime capability to a national security issue, particularly relevant in contexts of supply chain disruptions (COVID, geopolitical conflicts).
Sagarmala Programme and Maritime India Vision 2030
The Sagarmala Programme, launched in 2015 under the Ministry of Ports, Shipping and Waterways, is India's flagship maritime infrastructure development initiative. It focuses on port-led development: port modernisation, port connectivity enhancement, port-linked industrialisation, and coastal community development. Maritime India Vision 2030 (MIV 2030), released in 2021 at the Global Maritime India Summit, extends this to a comprehensive 10-year roadmap with 150+ strategic initiatives and projected investment of ₹3-3.5 lakh crore.
The ₹77,000 crore package announced by the government operationalises commitments under MIV 2030, specifically addressing the shipbuilding subsidy gap (Indian yards are 15-25% more expensive than Korean/Chinese yards due to structural cost disadvantages).
Cabotage Policy and Coastal Shipping Regulation
Cabotage refers to the carriage of goods or passengers between two domestic ports by ships. India's cabotage policy has historically restricted coastal trade to Indian-flagged vessels (under the Merchant Shipping Act, 1958, Sections 406-407) to protect domestic shipping. However, this restriction, combined with India's small domestic fleet, led to higher coastal freight rates and inefficiency. India reformed cabotage rules in 2018 and 2023, progressively allowing foreign-flagged vessels to operate coastal routes. The Coastal Shipping Bill, 2025 (replacing Part XIV of the Merchant Shipping Act, 1958) introduces a modernised framework aligned with international standards.
Key Details
- Merchant Shipping Act, 1958: Primary legislation governing Indian shipping; Sections 406-407 defined original cabotage restrictions
- 2018 Reform: Allowed foreign vessels in coastal transshipment with a DGS (Directorate General of Shipping) licence
- 2023 Reform: Further relaxed — allowed foreign-flagged vessels on coastal routes without a DGS licence, to reduce freight costs and increase connectivity
- Coastal Shipping Bill 2025: Modernises the framework; aims to position India as a transshipment hub (currently, Indian cargo transships at Colombo, Singapore, Dubai)
- DGS (Directorate General of Shipping) under Ministry of Ports, Shipping and Waterways: Regulator for ship registration, seafarer certification, maritime safety
The push to build a domestic fleet directly addresses the cabotage paradox — India relaxed cabotage to reduce costs, but this further disadvantaged Indian shipping companies. Rebuilding domestic fleet capacity through the ₹77,000 crore package would eventually allow tighter cabotage enforcement once Indian ships can meet domestic cargo needs.
- India's coastline: ~7,516 km (mainland: ~5,422 km + island territories)
- India's major ports (under central jurisdiction): 12
- India's share in global merchant fleet: less than 2%
- Foreign vessel dependence: over 90% of India's trade carried on foreign-flagged vessels
- Government package for maritime expansion: ₹77,000 crore
- Sagarmala projects planned: 840 projects worth ₹5.8 lakh crore by 2035
- Sagarmala projects completed: 272 worth ₹1.41 lakh crore (as of 2025)
- MIV 2030 investment target: ₹3-3.5 lakh crore across 150+ initiatives
- India's logistics cost as % of GDP: ~13-14% (target: 8% by 2030)
- Port capacity target (MIV 2030): 10,000 MTPA (million tonnes per annum)
- Merchant Shipping Act: 1958; Coastal Shipping Bill: 2025 (modernisation)
- Key shipbuilder: Garden Reach Shipbuilders and Engineers (GRSE), Kolkata — public sector shipyard