India's Shipping Challenges

Published On:

India's shipping industry faces stagnation despite government efforts, requiring urgent reforms in financing, taxation, and regulatory policies.

The Indian government has invested heavily in maritime infrastructure under the Sagarmala programme, with 839 projects requiring ₹5.8 lakh crore by 2035. However, despite a growing economy and increasing EXIM trade, India's shipping industry remains stagnant.

Challenges include limited capital access, high borrowing costs, rigid collateral norms, short loan tenures, and complex regulatory requirements. Indian shipping continues to lose market share to foreign-flag vessels due to taxation laws favoring them, restrictions on fund repatriation, and mandatory seafarer training costs. These factors increase operational costs and reduce competitiveness.

In contrast, ships registered in tax havens benefit from easier credit access, lower borrowing costs, and minimal regulations. The global trend favors larger, more efficient vessels, but Indian shipbuilders struggle due to financing and technology gaps.

The 2024 Union Budget introduced measures like a ₹25,000 crore investment for shipbuilding clusters and a 10-year duty exemption on imported ships, but these efforts may fall short without comprehensive reforms. Removing the 5% IGST on ship capital costs and TDS exemptions for Indian seafarers are also demanded.

India aims to boost its EXIM trade to $2 trillion by 2030, but achieving this requires urgent policy changes, favorable financing, and stronger industry support to reduce reliance on foreign-flag carriers.