Union Budget 2025-26: Key Boosts for India's Maritime and Logistics Sector

Updated on February 03, 2025

Union Budget 2025-26

Union Budget 2025-2026: Key Highlights for Ocean Freight Logistics

The Union Budget 2025-2026 marks a significant push toward modernizing India's ocean freight logistics sector. With a strong emphasis on infrastructure development, digital transformation, and sustainability, the budget introduces targeted measures to enhance efficiency, reduce costs, and promote India as a global maritime hub. The strategic initiatives outlined aim to boost shipbuilding, improve port connectivity, and encourage green shipping practices, ultimately driving economic growth and strengthening India's position in international trade. Below are the key highlights and their implications for the industry.

Initiative Details
Maritime Development Fund

Establishment of a ₹25,000 crore fund to support the shipbuilding and repair industry, with up to 49% government contribution and the remainder from ports and private sector investments.

New Shipping Company

Formation of a new shipping company in collaboration with oil refiners and the Shipping Corporation of India to expand the national fleet and reduce reliance on foreign carriers.

Shipbuilding Clusters and Tax Incentives

Promotion of shipbuilding clusters and extension of a 10-year import tax exemption on inputs for shipbuilding and shipbreaking activities. Issuance of credit notes for shipbreaking to encourage the scrapping of old vessels and construction of new ones.

Port Connectivity Enhancements

Implementation of economic railway corridors and port connectivity corridors under the PM Gati Shakti Programme to improve logistics efficiency and reduce costs.

These initiatives are designed to enhance infrastructure, support industry growth, and improve overall efficiency in India's maritime sector.

1. Maritime Development Fund

A major announcement in the budget is the establishment of a Maritime Development Fund with an initial allocation of ₹25,000 crore ($2.9 billion).

Objectives of the Fund:

  • Support shipbuilding and repair industries in India.
  • Reduce dependence on foreign carriers.
  • Encourage modernization of ports and shipping facilities.

Funding Distribution:

Component

Funding Source

Government Contribution

49% of the fund

Ports & Private Sector

51% of the fund

2. Establishment of a New Shipping Company

The government plans to set up a new shipping company in collaboration with oil refiners and the Shipping Corporation of India.

Purpose:

  • Expand India's national fleet for oil and gas transportation.
  • Reduce reliance on foreign shipping companies for fuel imports.
  • Enhance India's shipping capacity in global trade routes.

3. Promotion of Shipbuilding Clusters and Tax Incentives

To boost India's shipbuilding industry, the government will:

  • Develop shipbuilding clusters to enhance manufacturing capabilities.
  • Provide a 10-year import tax exemption on shipbuilding and shipbreaking inputs.
  • Introduce credit notes for shipbreaking to encourage scrapping of old vessels.

4. Port Connectivity Enhancements

A key focus area is improving connectivity to ports through the PM Gati Shakti Programme, aimed at streamlining logistics operations.

Planned Enhancements:

  • Development of economic railway corridors.
  • Strengthening port connectivity corridors to improve transportation efficiency.
  • Reduction in overall freight movement time and costs.

5. Increased Investment in Coastal Shipping

The budget promotes coastal shipping as an energy-efficient and cost-effective mode of transport.

Key Developments:

  • Expansion of dedicated coastal shipping routes.
  • Incentives for businesses using coastal shipping to reduce carbon emissions.
  • Upgradation of berths and terminals at major ports.

6. Green Shipping Initiatives

The budget has also addressed the need for sustainable maritime practices, including:

  • Encouraging the use of green hydrogen and LNG-powered vessels.
  • Implementing shore power supply at ports to reduce emissions.
  • Incentivizing the adoption of electric cargo handling equipment.

 

7. Digitalization and Automation in Logistics

The government aims to enhance efficiency through technology-driven solutions.

Key Digital Initiatives:

  • Expansion of the National Logistics Portal – Marine for real-time shipment tracking.
  • AI-driven predictive analytics for port congestion management.
  • Implementation of automated cargo handling systems at major ports.

8. Economic Survey 2025-26 Insights

The Economic Survey 2025-26 has provided crucial insights into India’s macroeconomic trends and their impact on ocean freight logistics:

  • Projected GDP Growth: 6.3% – 6.8%.
  • Recommendation: Strengthen macro fundamentals to mitigate global economic risks.
  • Call for Deregulation: Emphasis on reducing bureaucratic delays in logistics.
  • Increase in Trade Volumes: Projected rise in exports and imports, boosting the need for efficient shipping infrastructure.

Conclusion

The Union Budget 2025-26 has introduced several forward-thinking initiatives to strengthen India's ocean freight logistics sector. The establishment of a Maritime Development Fund, investments in port connectivity, incentives for green shipping, and advancements in digital logistics are expected to enhance efficiency and reduce costs. These measures align with India's goal of becoming a global maritime hub, promoting sustainable and technology-driven growth in the shipping industry.

Sources: PIB govt, Economic times, Live mint, Baird maritime

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