Shipyards investing at least ₹1,000 crore and generating 1,000 jobs will qualify for a Structured Package of Assistance, with options such as equity participation, asset leasing, capital subsidies or production-linked incentives.
The Tamil Nadu government on Wednesday unveiled its Shipbuilding Policy 2026, positioning the State as a hub for high-value, large ocean-going vessels, including Very Large Crude Carriers (VLCCs), as it seeks to capitalise on India’s expanding maritime ambitions.
Under the policy, shipyards engaged in the manufacturing, repair, and maintenance of maritime structures, with a minimum committed investment of ₹1,000 crore and the creation of at least 1,000 jobs, will qualify for a Structured Package of Assistance.
Eligible shipyards can choose from four incentive mechanisms — equity participation by the State, an asset leasing model, capital subsidy on eligible fixed assets and other incentives, or production-linked incentives.
SPV under SIPCOT
To facilitate implementation, the State will create a Special Purpose Vehicle (SPV) with a separate legal existence under the State Industries Promotion Corporation of Tamil Nadu (SIPCOT). An agency nominated by the Government of India may also be invited as a major stakeholder.
The SPV will support the establishment of shipyards in identified clusters by enabling seaside facilities supported by the Centre and land-side infrastructure facilitated by the State through SIPCOT. It will also play a key role in easing project financing.
The government may become a minority equity stakeholder in proposed shipyard projects, either directly or through an identified agency. Where equity support is extended in cash, it will initially be structured as debt in tranches linked to clearly defined milestones. The debt may later be converted into equity — up to 49 per cent — upon achievement of milestones, with subsequent tranches released thereafter.
Asset buy-and-lease-back model
A key feature of the policy is a structured asset leasing framework. The State, through an identified entity, may buy and lease back critical shipyard assets — excluding land — of value up to ₹6,000 crore or 20 per cent of the total project cost, whichever is lower.
The total State outflow will be capped at ₹1,000 crore per year across all projects in Tamil Nadu. Any unutilised allocation may be carried forward.
Under the arrangement, a shipbuilding company may acquire critical assets based on operational requirements and subsequently sell them to the SPV, which will immediately lease them back under mutually agreed terms. Lease rates and conditions will be benchmarked against major shipyards or determined by an empanelled committee, factoring in depreciation and asset life to achieve a mutually acceptable internal rate of return (IRR) for both investor and the State.
Support for component makers
The policy also extends incentives to the component manufacturing industry. Any investment of at least ₹50 crore, supplying a minimum of 50 per cent of production (in invoice value terms) to shipyards and creating at least 100 jobs, will be eligible for incentives under the Tamil Nadu Industrial Policy, 2021, with recognition as a Sunrise sector.
Investments between ₹50 crore and ₹499 crore will be treated as large projects, while those above ₹500 crore will be classified as per TNIP 2021 norms.
Aligning with the Centre’s push
The State policy comes amid the Centre’s broader push to revitalise India’s shipbuilding sector, including a ₹69,725 crore support package, comprising a ₹25,000 crore Maritime Development Fund and a ₹24,736 crore Shipbuilding Financial Assistance Scheme.
India’s shipbuilding sector remains modest at $0.88–1.12 billion (₹7,450–9,520 crore), accounting for just about 0.06 per cent of the global market share. This is despite nearly 95 per cent of India’s trade, by volume, and 70 per cent by value, being handled through maritime transport.
The Indian fleet has grown from 1,429 vessels (12.75 million GT) in 2019 to 1,526 vessels (13.74 million GT) in 2023, but nearly 95 per cent of global shipbuilding remains concentrated in three countries, with China holding a dominant share of around 51 per cent.
The Shipbuilding Policy 2026 will remain valid for five years from the date of notification or until a new policy is announced, whichever is later, and may be revised periodically in line with industry requirements.
Published on March 4, 2026