India's defence shipbuilding sector is undergoing a profound transformation, propelled by escalating naval capital outlays, robust governmental initiatives, and intensifying strategic demands within the Indian Ocean Region. 

A comprehensive institutional analysis by Phillip Capital underscores this pivotal juncture, projecting sustained expansion underpinned by a colossal project pipeline exceeding ₹2.3 trillion across diverse high-value platforms such as destroyers, frigates, corvettes, submarines, fleet-support ships, and aircraft carriers.

This formidable order book, spanning execution, approval, and planning phases, guarantees multi-year revenue predictability for domestic shipyards, with timelines extending into the mid-2030s owing to protracted construction cycles typical of major naval assets.

The Indian Navy's capital allocation within the FY 2025–26 defence budget of ₹6.81 lakh crore amounts to approximately ₹97,150 crore, representing nearly 20 per cent of the total, of which ₹28,000–30,000 crore annually channels directly into shipbuilding and infrastructure enhancements.

Over 60 naval vessels are presently under construction, complemented by 70–80 additional units in the pipeline, encompassing advanced stealth frigates under Project 17A (Nilgiri-class), Project 15B Visakhapatnam-class destroyers, Kalvari-class submarines, and next-generation corvettes.

Notable milestones include the commissioning of INS Vikrant, India's indigenously constructed aircraft carrier, in September 2022 after 13 years of development, exemplifying the sector's maturing capabilities despite historical delays.

Public sector undertakings dominate this landscape, with Mazagon Dock Shipbuilders Limited, Cochin Shipyard Limited, Garden Reach Shipbuilders & Engineers, and Hindustan Shipyard Limited spearheading major combatant vessel production. Private entities like Larsen & Toubro are increasingly integral, particularly in auxiliary vessels, modular construction, and systems integration, fostering a hybrid model that bolsters indigenisation—now mandating 75 per cent domestic procurement for defence needs.

Complementing this defence-centric momentum is the landmark ₹697.25 billion Shipbuilding and Maritime Development Package, ratified by the Union Cabinet in September 2025—the most substantial maritime stimulus in India's history. Structured across four pillars, it encompasses financial assistance, long-term financing via a ₹250 billion Maritime Development Fund, interest subventions, refund guarantees, and infrastructure augmentation to rectify entrenched cost and scale deficits relative to East Asian rivals.

​Central to the package is the Shipbuilding Financial Assistance Scheme, extended until March 2036 with a ₹247.36 billion corpus, alongside a ₹199.89 billion Shipbuilding Development Scheme targeting an annual capacity of 4.5 million gross tonnes.

These interventions aim to cultivate eight coastal shipbuilding clusters—five greenfield sites in Andhra Pradesh, Odisha, Tamil Nadu, Gujarat, and Maharashtra, plus brownfield expansions in Gujarat and Kerala—integrating manufacturing, vendor ecosystems, and logistics.

​India's shipbuilding output remains predominantly defence-oriented, encompassing warships, ferries, patrol craft, and refit operations, with negligible footing in large-scale commercial builds. Globally, the nation lingers outside the top 15 by tonnage, dwarfed by China, South Korea, and Japan, which command over 90 per cent of commercial orders, while holding a mere 1 per cent share overall.

Strategic imperatives in the Indian Ocean Region, amid rising maritime contestation, amplify this urgency, positioning shipbuilding as a cornerstone of national security and the 'blue economy', which aspires to elevate its GDP contribution from 4 per cent to 12 per cent by 2047.

The government's Maritime India Vision charts a trajectory to the top 10 maritime nations by 2030 and top five shipbuilders by 2047, leveraging defence exports—reaching ₹23,622 crore in FY 2024–25—towards a ₹50,000 crore annual target by 2029.

Export potential surges through SAGAR initiatives, offering patrol vessels and platforms to regional allies via lines of credit, mirroring global models where state-backed subsidies propelled nations like China to dominance. Fleet procurement expenditure is poised to triple to ₹244 billion in FY26 from ₹93 billion in FY18, with dockyard investments doubling, ensuring parallel advancement in repair-refit capacities.

This convergence of budgetary discipline, policy innovation, and geopolitical resolve heralds India's shipbuilding renaissance, mitigating historical vulnerabilities while harnessing indigenous prowess for self-reliance. Phillips Capital's prognosis signals investor optimism, with public shipyards poised as primary gainers amid a 10–15-year modernisation vista that could redefine India's maritime stature.

​Based On PTI Report