Cabinet Set to Approve Rs 25,000-Crore Fund for Shipping Sector

Overview of the Maritime Development Fund (MDF) Proposal

The Union Cabinet is expected to approve a Rs 25,000-crore Maritime Development Fund (MDF) soon, according to sources. This fund is designed to support the shipping sector, a crucial part of India’s economic infrastructure. The Ministry of Shipping has already sent the final proposal for Cabinet approval after extensive deliberations within the ministry and with industry stakeholders.

Highlights:

• Union Cabinet to approve Rs 25,000-crore MDF for shipping sector.

• Proposal cleared by the Expenditure Finance Committee (EFC).

• Final proposal now awaiting Cabinet approval.

Background and Budget Announcement

During the Union Budget speech on February 1, 2025, Finance Minister Nirmala Sitharaman had announced the creation of the Maritime Development Fund as part of a broader strategy to boost India’s maritime sector. Following the announcement, detailed discussions took place between the Ministry of Shipping and industry stakeholders to fine-tune the modalities of the fund’s usage. The Expenditure Finance Committee (EFC) subsequently approved the proposal, and it has now been forwarded to the Union Cabinet for final approval.

Highlights:

• FM Sitharaman announced the creation of the MDF in the Union Budget 2025.

• Detailed discussions held with industry stakeholders to finalize proposal.

• Expenditure Finance Committee cleared the proposal before it was sent to Cabinet.

Fund Structure and Sources of Capital

The MDF will offer both equity and debt securities as financial assistance to the shipping sector. The fund’s initial corpus is pegged at Rs 25,000 crore, with the government contributing 49% of the amount. The remaining funds will be mobilized from major port authorities, other government entities, Central PSUs, financial institutions, and the private sector. This collaborative funding model is aimed at significantly strengthening the financial foundation of India’s maritime industry.

Highlights:

• Fund to provide equity and debt securities to the shipping sector.

• Government to contribute 49% of the Rs 25,000 crore corpus.

• Additional funds to be mobilized from various public and private sources.

Objectives and Goals of the MDF

The key objective of the Maritime Development Fund is to finance the acquisition of ships and boost India’s fleet of Indian-flagged vessels. The MDF aims to increase the share of Indian-flagged ships in global cargo to 20% by 2047. This initiative is expected to reduce India’s dependence on foreign vessels, improve the country’s Balance of Payments, and enhance its strategic maritime interests.

The MDF also targets to generate investments worth up to Rs 1.5 lakh crore in the shipping sector by 2030, further emphasizing its long-term impact on India’s maritime capabilities.

Highlights:

• MDF aims to boost Indian-flagged ships’ share in global cargo to 20% by 2047.

• Reduction in reliance on foreign vessels and enhanced strategic interests.

• Targeted investment of Rs 1.5 lakh crore in the shipping sector by 2030.