India’s Ship Recycling Sector

India has emerged as the world’s largest Ship Recycling sector in 2025. This is a major milestone in transforming the shipbuilding sector as well. Read here to learn more.

The United Nations Conference on Trade and Development (UNCTAD) reported that India emerged as the world’s largest ship recycling nation in 2025, achieving a major milestone under the Maritime India Vision (MIV) 2030 ahead of schedule. Simultaneously, growing strategic cooperation with South Korea, one of the world’s leading shipbuilding nations, is providing India with an unprecedented opportunity to transform itself into a global hub for shipbuilding.

Through ambitious policy initiatives, such as the Shipbuilding Financial Assistance Scheme (SBFAS), the Shipbuilding Development Scheme (SbDS), the Maritime Development Fund (MDF), and the Maritime Amrit Kaal Vision 2047, India seeks to leverage its leadership in ship recycling to build a competitive, sustainable, and technologically advanced maritime manufacturing ecosystem.

India’s Ship Recycling Sector

India has become the largest ship recycling nation in the world.

• India’s share of global ship recycling increased from 30.1% (2024) to 35.4% (2025).
• Approximately 2.99 million Gross Tonnes (GT) of ships were recycled in 2025.
• Ship recycling volume increased by nearly 60% over the previous year.

This achievement fulfills a major target of Maritime India Vision 2030 well ahead of schedule.

Alang Ship Recycling Yard

The Alang Ship Recycling Yard in Gujarat, the world’s largest ship recycling facility, remains the backbone of India’s recycling industry.

Key developments include:

• Expansion of capacity from around 5 million LDT to nearly 9 million Light Displacement Tonnage (LDT).
• Modernisation of recycling infrastructure.
• Compliance with international environmental standards.
• Efforts to secure inclusion in the European Union’s approved list of ship recycling facilities.

Policy Measures Driving Growth

1. Hong Kong Convention Compliance

India strengthened its ship recycling industry through the Recycling of Ships Act, 2019, aligning domestic practices with the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC).

Government support included:

• ₹53 crore assistance
• Modernisation of ship recycling yards
• Upgradation of 115 recycling facilities to international standards

2. Ship-breaking Credit Note Scheme

An innovative incentive links ship recycling with domestic shipbuilding. Under the scheme:

• Ship owners receive a credit equivalent to 40% of the scrap value of recycled ships.
• The credit can be utilised (up to 5% of the value of a new vessel) when constructing ships at Indian shipyards.

This creates a circular maritime economy by connecting recycling with new ship construction.

India’s Shipbuilding Transformation

While India leads in ship recycling, its shipbuilding capacity remains relatively modest.

Present Status

• Shipbuilding capacity: 0.072 million Gross Tonnage
• Global ranking: 18th
• Share in global shipbuilding: Less than 1%

In contrast, China, South Korea, and Japan together account for nearly 95% of global shipbuilding orders.

India aims to dramatically improve this position.

Maritime India Vision 2030 & Maritime Amrit Kaal Vision 2047

The Government has set ambitious targets:

• Top 10 global shipbuilding nation by 2030
• Top 5 shipbuilding nation by 2047

To achieve this, several flagship initiatives have been launched.

Shipbuilding Financial Assistance Scheme (SBFAS)

SBFAS provides financial incentives to Indian shipyards.

Key Features

• Financial assistance ranging from 15% to 25% of vessel construction cost.
• Supports domestic shipbuilders against subsidized foreign competitors.
• Expected to facilitate approximately ₹96,000 crore worth of shipbuilding projects over the next decade.
• Operational until 2036, with extension envisaged up to 2047.

Shipbuilding Development Scheme (SbDS)

The scheme focuses on expanding India’s manufacturing ecosystem.

Major components include:

• Development of greenfield shipbuilding clusters.
• Modernization of existing shipyards.
• Establishment of the India Ship Technology Centre at the Indian Maritime University.
• 100% capital support for common infrastructure in new clusters.
• 25% capital assistance for expansion of existing shipyards.
• Credit Risk Coverage Framework to improve project financing.

The long-term goal is to increase commercial shipbuilding capacity to 4.5 million GT annually by 2047.

Maritime Development Fund (MDF)

To address financing challenges, the government has established a dedicated ₹25,000 crore Maritime Development Fund.

It consists of:

Maritime Investment Fund (MIF)

• ₹20,000 crore equity fund.
• Government participation up to 49%.
• Mobilizes private investment.

Interest Incentivization Fund (IIF)

• ₹5,000 crore grant-based support.
• Reduces borrowing costs for shipbuilders.
• Encourages long-term investment.

Sagarmala Finance Corporation Limited (SMFCL)

India’s first maritime-focused Non-Banking Financial Company (NBFC) provides:

• Long-term financing
• Maritime infrastructure funding
• Shipbuilding project support
• Port modernization finance

Green Shipbuilding

India is simultaneously positioning itself as a leader in sustainable shipping.

Green Tug Transition Programme (GTTP)

Promotes adoption of:

• LNG-powered vessels
• Battery-electric vessels
• Hydrogen-powered ships
• Methanol-powered vessels

Harit Nauka Guidelines

• Encourage the construction of environmentally friendly inland vessels using alternative fuels and low-emission technologies.

India-South Korea Partnership

South Korea’s expertise is expected to significantly accelerate India’s shipbuilding ambitions.

Mega Shipyard Development

Under the VOYAGES (Shared Vision for Operation of Yard Assisted Growth with Efficiency and Scale) framework:

• India’s first mega greenfield shipyard will be established at Thoothukudi.
• Planned capacity: 2.5 million GT
• Expected employment generation: 15,000 direct jobs

Technology Transfer

Leading Korean shipbuilders such as HD Hyundai, Samsung Heavy Industries, and Hanwha Ocean will support India through:

• Ship design
• Automation
• Green propulsion technologies
• Advanced manufacturing systems

Marine Equipment Manufacturing

• The Korea Marine Equipment Association (KOMEA) has established a presence in Mumbai to develop domestic marine equipment manufacturing and strengthen India’s maritime supply chain.

Skill Development

Partnerships involving will enhance Marine engineering, Naval architecture, Ship design, Maritime research

• Korea International Cooperation Agency (KOICA)
• Indian Maritime University (IMU)
• Korea Maritime & Ocean University (KMOU)

Challenges Facing India’s Shipbuilding Sector

High Cost of Capital

• Indian shipbuilders face borrowing costs of 10-11%, compared to 4-8% in competing countries.

Import Dependence

• Approximately 60-70% of critical shipbuilding components, including marine-grade steel, propulsion systems, and navigation equipment, are imported.

Infrastructure Constraints

• Most Indian dry docks are smaller than 310 metres, limiting the construction of Ultra Large Crude Carriers (ULCCs) and Mega container ships

Weak Domestic Demand

• Indian shipping companies often prefer purchasing cheaper second-hand foreign vessels rather than placing orders with domestic shipyards.

Underdeveloped MRO Sector

• India accounts for less than 1% of the global Maintenance, Repair and Operations (MRO) market, with many Indian vessels relying on foreign facilities in Singapore, Dubai, and Colombo.

Skilled Manpower Gap

There is a shortage of professionals trained in:

• Automated shipbuilding
• Green propulsion systems
• Advanced marine engineering
• Digital ship design

Way Forward

Integrate Recycling with Shipbuilding

• Recovered steel and materials from India’s globally competitive ship recycling industry should be integrated into domestic shipbuilding, creating a circular maritime economy.

Develop Maritime Clusters

India should replicate South Korea’s Ulsan Model, integrating:

• Shipyards
• Marine equipment manufacturers
• Research institutions
• Training centres
• Logistics infrastructure

Strengthen Indigenous Manufacturing

To reduce import dependence, promote localization of:

• Marine engines
• Navigation systems
• Shipbuilding steel
• Electronic equipment

Promote Green Shipbuilding

To become a global leader in sustainable maritime technologies, leverage IMO decarbonization goals by investing in:

• Hydrogen-powered vessels
• Methanol-fuelled ships
• Electric propulsion
• Green port infrastructure

Strengthen Domestic Demand

• Strict enforcement of the Right of First Refusal (RoFR) for Indian-built and Indian-flagged vessels in government cargo transportation can create a stable domestic order book.

Conclusion

India’s emergence as the world’s leading ship recycling nation marks the beginning of a broader maritime transformation. By combining policy reforms, financial incentives, green technologies, world-class infrastructure, and strategic partnerships, particularly with South Korea, India aims to evolve from a recycler of ships into a globally competitive shipbuilding powerhouse.

Achieving the objectives of Maritime India Vision 2030 and Maritime Amrit Kaal Vision 2047 will not only strengthen economic growth and employment but also enhance maritime security, industrial self-reliance, and India’s position in the global blue economy.