India’s $5.4 Billion Shipbuilding Gambit Takes Aim at China—and Rattles the West
Paul Morgan December 30, 2025
India just threw down $5.4 billion to crash the global shipbuilding party. For Western yards already struggling against Asian dominance, it’s another wake-up call they can’t afford to ignore.
By Paul Morgan (gCaptain) – New Delhi approved the massive subsidy package earlier this year, combining $3 billion in direct shipbuilding subsidies with $2.4 billion for yard infrastructure. The schemes run through 2036 with a possible extension to 2047, the year India aims to achieve “major maritime power” status alongside developed-nation aspirations.
The timing and scale matter. India currently ranks a distant 20th-22nd globally in shipbuilding, controlling barely 0.06% of world output. The country spends roughly $70-75 billion annually on foreign shipping services while only 7% of Indian-owned vessels are built domestically. Prime Minister Narendra Modi’s government has framed this as India’s “Maruti moment” for ships, a reference to the 1980s automotive revolution that transformed India from importer to manufacturer.
The ambition is enormous: break into the global top 10 by 2030 and the top five by 2047. India isn’t hiding its strategy. Officials are openly borrowing from China’s early-2000s industrial policy, the same playbook that catapulted Beijing from 14% of global shipbuilding to over 70% today. China now dominates commercial shipbuilding with a market share between 55-74% depending on how you measure it. South Korea holds roughly 25-28%, Japan around 13-17%. Everyone else fights for scraps.
The Indian package follows the familiar formula: demand-side subsidies of 15-25% per vessel to make orders attractive, supply-side infrastructure investment to build world-class yards, and government-backed credit guarantees to match the export financing that makes Chinese and Korean yards so competitive.
New Delhi’s pitch to the world is simple but potent: we offer China-level pricing and state backing, minus the geopolitical risk.
For European shipbuilders, this is terrible news. The continent’s yards have already retreated from standard commercial vessels, bulkers, tankers, containerships, to specialised niches like cruise ships, ferries, and naval construction. They survive on high-value complexity, not volume.
But the global shipbuilding market is only growing modestly, from roughly $160-170 billion currently to just over $200 billion by 2030. That’s not enough room for a major new subsidised competitor without triggering price wars. If India successfully adds millions of tonnes of yard capacity and starts competing on price with state guarantees, European yards could face another squeeze on their remaining commercial orderbooks.
The strategic concern runs deeper. India’s schemes include government-backed insurance for pre- and post-shipment risks, exactly the kind of export-credit support that has made Asian yards so formidable. European yards have long complained they can’t match Chinese financing terms. Now they’ll potentially face the same challenge from a democratic competitor they can’t easily criticize on geopolitical grounds.
America’s Uncomfortable Mirror
For the United States, India’s move is particularly pointed. American commercial shipbuilding accounts for just 0.1-0.13% of global output, essentially a rounding error. The entire sector depends on the Jones Act, which requires domestic coastal shipping to use US-built, US-flagged, US-crewed vessels. No major international ship owner has ordered large commercial vessels from US yards in decades.
The cost gap is brutal: US yards charge three to four times what Asian yards do for comparable vessels. Some analyses put the gap at tenfold. Construction of a container ship that costs $50 million in South Korea might run $200-500 million in the United States, if you could even find a yard capable of building it.
Washington has essentially conceded the global commercial market. Recent US strategy has focused on maintaining capacity for Navy vessels and exploring partnerships with South Korean and Japanese yards. In November 2024, Navy Secretary Carlos Del Toro visited South Korea to discuss technology transfer and shipbuilding cooperation. Hanwha Ocean’s acquisition of Philly Shipyard in Philadelphia signals how far the US has to go, American shipbuilding increasingly means foreign investment in US facilities.
India’s emergence as a subsidized, export-oriented competitor makes that gap impossible to ignore. If cargo owners can order modern vessels in India at near-Asian prices without the China risk, pressure could intensify to rethink the Jones Act’s US-build requirement, which critics say inflates domestic shipping costs and reduces competitiveness.
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