India is preparing a fresh plan to increase the number of Indian-flagged merchant ships. This move comes as an older scheme worth ₹1,624 crore has failed to make much progress. The government wants more Indian ships to carry cargo in global trade and reduce dependence on foreign shipping lines.
Currently, only about 8% of India’s import cargo is carried by Indian-flagged ships—a number that hasn’t improved since 2021, when the original scheme began.
To address this, the Ministry of Ports, Shipping, and Waterways (MoPSW) is working with the Ministries of Petroleum, Steel, and Fertiliser. Together, they have found demand for around 200 new ships worth ₹1.3 lakh crore.
These ships will be used for imports in key sectors like petroleum, steel, and fertilisers. The plan is for public sector companies (PSUs) to jointly own these vessels and get them built in Indian shipyards.
The older scheme, announced in the 2021-22 budget, offered up to 15% subsidy to Indian companies for carrying government cargo like crude oil, LPG, coal, and fertilisers. However, only ₹330 crore has been used so far, and Indian ships’ share in cargo hasn’t improved.
In 1987-88, Indian ships carried 40.7% of the country’s trade. That figure dropped to just 7.8% by FY19. This decline has led to India paying nearly $70 billion each year to foreign shipping companies.
Indian-flagged ships face higher operating costs—around 20% more than foreign ships. This is due to taxes, shorter loan terms, and costly debt. Indian ships also pay GST on services and on ship imports, unlike foreign ships, making them less competitive.
Industry leaders say no steps have been taken yet to reduce these financial burdens.
With the current scheme failing, the government is working on a new, bigger plan to support Indian-flagged ships. If implemented well, this move could boost local shipbuilding, save foreign exchange, and help India become a stronger player in global maritime trade.
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Published on: Jul 7, 2025, 3:08 PM IST
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