Government Proposes Near-Zero Land Cost Model for Greenfield Shipbuilding Clusters

The Union Government, through the Ministry of Ports, Shipping and Waterways, has proposed a Greenfield Shipbuilding Cluster Development Scheme aimed at strengthening domestic shipbuilding capacity. Under the proposal, land and common maritime infrastructure would be offered to shipyards on long-term lease terms of up to 60 years, extendable, with only nominal lease rentals, as the cost of land would largely be absorbed by the Central and State Governments.

As part of the framework, land parcels earmarked for each cluster would be transferred at a token value of Rs. 1 to a project special purpose vehicle (SPV) structured either as a joint venture between the Centre and the respective State Government or as an entity owned by the Central Government or its agency. Where government land is unavailable, the state government would acquire land at its own cost.

Each proposed shipbuilding cluster would span approximately 2,000 acres. About half of this area would be allocated to one or more shipyards, while the balance would be reserved for ancillary industries, suppliers, training institutions, and supporting ecosystem infrastructure.

The scheme envisages the development of three to four clusters across coastal states, limited to one per state. Each cluster is expected to support manufacturing capacity in the range of 1.0-1.2 million gross tonnage (GT).

According to Ministry estimates, establishing a greenfield shipyard with an annual capacity of around 0.5 million GT would require investment exceeding Rs.15,000 crore. The absorption of land costs is therefore positioned as a key structural incentive to lower entry barriers for large-scale shipbuilding investments.

The policy is designed to address long-standing industry concerns regarding land access, infrastructure readiness, and risk allocation, thereby improving India’s competitiveness relative to established global shipbuilding centers.