India is preparing a ₹4,000 crore ($454 million) incentive package to strengthen its shipbreaking industry and claw back market share from regional rivals Bangladesh and Pakistan, people familiar with the matter said.
The stimulus, set to roll out over ten years starting 2026, is expected to receive cabinet approval by the end of September. Under the plan, shipowners bringing obsolete vessels to India will receive a credit note worth about 40% of the ship’s scrap value. Valid for three years, the credit note can be used to buy ships built in India, sold in the secondary market, or combined with other notes for larger purchases.
Officials say the scheme is designed to reinforce India’s position in the global ship recycling market, where it dismantled nearly a third of vessels scrapped in 2023. Bangladesh led with 46%, while Pakistan also maintained a significant presence.
At the heart of India’s shipbreaking sector lies Alang, the sprawling yard on the country’s western coast that accounts for 98% of domestic activity. But rising competition from neighboring yards, built on abundant and cheap labor, has steadily eroded India’s dominance.
The industry has shown signs of recovery in recent months, following years of stagnation caused by reduced scrapping of oil tankers after Russia’s invasion of Ukraine. With global freight rates spiking amid geopolitical disruptions, many shipowners prolonged the lifespan of aging vessels instead of sending them for dismantling.
In addition to incentives, India is weighing the creation of a shipbreaking facility on its east coast to capture business currently flowing to Bangladesh.
The government is also finalizing a ₹2,500 crore maritime development fund to encourage shipbuilding and reduce reliance on foreign-built vessels. First announced in the February 2025 budget, the fund is expected to be cleared by the cabinet later this month.
Together, the dual initiatives underscore Prime Minister Narendra Modi’s strategy to reposition India as both a shipbuilding and ship recycling hub, strengthening the country’s maritime footprint in the region.
