The economic survey said that shipbuilding has one of the highest employment multipliers and is capable of generating mass employment in remote, coastal and rural areas

According to Economic Survey, the recently commissioned aircraft carrier INS Vikrant alone engaged approximately 500 MSMEs, 12,000 employees from ancillary industries, and 2,000 shipyard employees.

Identifying the shipbuilding industry as a strategically important industry due to its role in energy security, national defence, and the development of the heavy engineering industry, the Economic Survey 2022-23 noted that it has the potential to increase the contribution of the industry and the services sector to the national GDP. With its immense direct and indirect linkages with most other leading industries and its huge dependence on the infrastructure and services sectors of the economy, the shipbuilding industry has the potential to strengthen the mission of an ‘Aatmanirbhar Bharat’, the survey said.

“Based on International shipbuilding statistics, if one takes a conservative Marginal Consumption to GDP Ratio (MCGR) of 0.45 for the shipbuilding sector, the investment multiplier would be approx. around 1.82. For example, an injection of approx. ₹1.5 lakh crore in naval shipbuilding projects would accrue a circulation of ₹2.73 lakh crore in the shipbuilding sector due to the multiplier effect,” the survey said.

In this regard, the survey said that among manufacturing activities, shipbuilding has one of the highest employment multipliers of 6.48 and is capable of generating mass employment in remote, coastal and rural areas, thereby absorbing the labour migrating from agricultural pursuits to manufacturing facilities established by shipyards and their ancillary industries.

“The Indigenisation initiatives implemented by the Indian Navy have resulted in a significant infusion of economic activity by creating employment opportunities for Micro, Medium and Small Enterprises (MSME) and other industries,” the survey said. For instance, the recently commissioned aircraft carrier INS Vikrantalone engaged approximately 500 MSMEs, 12,000 employees from ancillary industries, and 2,000 shipyard employees, it noted.

Further, the survey said that a study undertaken by the Indian Navy for the construction of seven P-17A frigates reveals that around three-fourths of the total project cost of warships is invested back into the Indian economy. This investment is ploughed back into the economy through indigenous sourcing of raw materials, development of equipment and systems installed onboard ships and other manpower services, it stated, adding that besides benefiting the ancillary industries and creating massive employment opportunities, an indigenous shipping and shipbuilding industry can also reduce freight bills and forex outgo, thereby reducing the current account deficit.

“Thus, we see that the strong forward and backward linkages of the shipbuilding sector play an important part in the creation of a self-reliant India,” the survey noted.

Stating that the Navy’s shipbuilding projects currently in progress at various Indian shipyards are poised to provide the requisite impetus to the industry, the survey noted that, as of date, more than 130 warships have been constructed at Indian shipyards, and currently, 41 of 43 ships and submarines are being constructed at various public and private sector shipyards in India. “These initiatives, through various channels, are contributing to economic growth and employment in the country,” the survey said.

The report also pointed to shipbuilding’s links to other ancillary industries, including steel, engineering equipment, port infrastructure, trade and shipping services, which have the potential to create a collaborative production ecosystem.

“It is noteworthy that a significant proportion of value addition, approximately 65%, in the construction of a ship, is derived from manufacturers of shipboard materials, equipment, and systems,” the survey added.