The Indian Government has unveiled an ambitious roadmap to transform the country into a global shipbuilding powerhouse, targeting a leap from the current 16th position to the top 10 by 2030 and the top five by 2047. The government has notified operational guidelines for two flagship initiatives worth over ₹44,700 crore, designed to revolutionize India's shipbuilding capabilities and create substantial employment opportunities.

Major Government Initiatives

The comprehensive strategy centers around two key schemes that address multiple aspects of shipbuilding development. Vijay Kumar, shipping secretary, explained that the Shipbuilding Financial Assistance Scheme (SBFAS) and the Shipbuilding Development Scheme (SbDS) are specifically designed to strengthen domestic shipbuilding capacity and improve global competitiveness. These schemes will support crucial areas including skilling, training, testing, and research and development in the shipbuilding sector.

Production Targets and Employment Generation

The schemes are projected to deliver significant improvements in India's shipbuilding output and job creation. The initiatives aim to increase India's annual shipbuilding capacity from under 1 lakh GT to 4.5 million GT, representing a massive scale-up in production capabilities. This expansion is expected to generate 30 lakh jobs across the shipbuilding ecosystem, addressing both skilled and semi-skilled employment needs.

The government has also identified strong market demand to support this expansion. Ministries have aggregated demand for over 400 vessels worth ₹2.2 lakh crore over the next decade, ensuring robust order visibility for Indian shipyards. Global shipping giants including CMA CGM and Maersk have already begun placing orders with Indian yards, demonstrating growing international confidence in India's shipbuilding capabilities.

Targeted Incentives and Local Content Requirements

The subsidy structure incorporates strategic local content requirements to boost domestic manufacturing. The schemes mandate a minimum 30% local content for eligibility, with this requirement rising to 40% for accessing full benefits. This approach aims to develop the entire domestic supply chain while making Indian shipyards globally competitive.

The government is also focusing on capacity expansion through both brownfield and greenfield development. For existing shipyard expansion, the government provides approximately 25% assistance to expand brownfield shipyards. Additionally, plans include setting up new greenfield shipyards to meet growing demand.

Regulatory Reforms and Future Strategy

The shipping secretary highlighted that the Draft Merchant Shipping Rules, 2026 aims to simplify regulations and integrate smaller operators into the mainstream shipbuilding ecosystem. The comprehensive approach addresses financing, technology, and skilling requirements to create a globally competitive shipbuilding industry.

The final component of the strategy involves creating a maritime development fund for equity investments in shipping operations to boost overall industry viability. Special emphasis is being placed on promoting circular economy principles through shipbreaking credit notes and supporting fleet renewal initiatives. Higher subsidy rates are specifically allocated for specialized vessels and green-fuel ships, aligning with global sustainability trends and technological advancement in maritime transportation.

Indian government bonds edged lower on Friday morning as traders maintained a cautious stance ahead of fresh debt supply and a heavy state borrowing calendar. The benchmark 10-year yield rose to 6.60% as of 10:35 a.m. IST, up from Thursday's close of 6.58%, reflecting market concerns about upcoming supply pressures.

Bond Market Performance

The bond market showed increased volatility on Friday as supply concerns intensified, with yields moving higher despite recent downward trends.

The yield movement comes despite a broader downward trend that saw yields fall 17 basis points throughout 2025, continuing to drift lower into the new year before Friday's uptick.

Major Debt Auction and State Supply Concerns

Market participants are particularly focused on Friday's substantial bond auction and the anticipated record state borrowing announcement.

Indian states are expected to announce their January-March borrowing calendar after market hours on Friday, with investors bracing for what could be a record quarterly supply of approximately ₹5 lakh crores. A private-bank trader noted that "the state debt auction calendar, followed by the Budget, will be the key triggers shaping risk appetite and the next move in bonds."

RBI Liquidity Measures and Market Dynamics

The Reserve Bank of India has been actively injecting liquidity through multiple measures to support market conditions.

The central bank has been conducting regular variable rate repo auctions since December 15 and is set to conduct open market purchases worth ₹1.50 lakh crores in January. The banking system cash was in a surplus of ₹23,865 crores as of Thursday, hovering around neutral levels after staying in deficit for most of December.

Interest Rate Environment and External Factors

Overnight index swap rates remained relatively stable in early trading, while external factors continue to influence domestic bond markets.

Rising U.S. Treasury yields are also weighing on Indian bonds, with the U.S. 10-year bond yield trading at 4.16% in Asian hours, up about 5 basis points in the last three sessions. This external pressure adds to domestic supply concerns as traders navigate the current market environment.