How Modi's India is sailing to self-reliance in high seas

In the months after the Russia-Ukraine war erupted in February 2022, several shipping tankers carrying Russian crude to Asia found themselves in a peculiar limbo. The oil was available, buyers were willing, and sea lanes were open. Yet movement stalled because insurers hesitated.

Without valid protection and indemnity cover from clubs linked to the International Group of Protection and Indemnity Clubs, ships risked being denied port entry or facing catastrophic liabilities. For India, which had ramped up imports of discounted Russian oil to over a third of its crude basket at one point, the constraint was immediate. Even when New Delhi chose not to formally align with US sanctions on Russian oil, it had to operate within an insurance regime shaped by them. Compliance was not always political. It was structural.

That moment exposed a hard truth. In modern trade, power does not only flow through navies or supply chains. It flows through underwriting. India decided to create an alternative to the American-controlled SWIFT for cross-border payments with internationalisation of UPI and self-reliant maritime mobility.

It is this vulnerability that frames the decision of the Prime Minister Narendra Modi-chaired Union Cabinet on April 18 to approve the Bharat Maritime Insurance Pool (BMI Pool) with a Rs 12,980 crore sovereign guarantee. BMI Pool is a strategic response to a world where sanctions, finance and risk have fused into instruments of statecraft. It marks India’s attempt to ensure that its trade lifelines are not hostage to external insurance decisions.

The architecture of BMI Pool reflects that ambition. It is designed to provide comprehensive maritime coverage, including hull and machinery for vessels, cargo insurance, protection and indemnity for third-party liabilities, and war-risk insurance for transit through volatile regions. It will cover Indian-flagged vessels, cargo moving to and from Indian ports, and ships operating in high-risk corridors. With an initial underwriting capacity of around Rs 950 crore and backed by a sovereign guarantee of Rs 12,980 crore, the pool positions the state as an insurer of last resort.

The scale of what it seeks to address is substantial. India handles 90-95 per cent of its trade by volume through maritime routes and about 70 per cent by value. Yet Indian-flagged ships carry barely 7-8 per cent of this cargo. The rest is transported by foreign vessels, insured largely by global players. The dominance of the International Group of Protection and Indemnity Clubs, which covers close to 90 per cent of global ocean-going tonnage for liability risks, means that critical decisions on coverage are often taken outside India’s jurisdiction.

This dependence creates three distinct vulnerabilities. First, the risk of sanctions. As seen in the Russia-Ukraine conflict, insurance can be restricted or withdrawn under geopolitical pressure. Second, cost volatility. War-risk premiums in conflict zones have risen two to three times during recent crises, sharply increasing shipping costs. Third, strategic dependence. India’s energy imports, fertiliser supply chains and export routes remain exposed to external underwriting decisions.

BMI Pool is meant to mitigate these risks by ensuring continuity of coverage. It offers a domestic fallback when global insurers pull back, stabilises premiums through pooled risk, and enables India to insure critical trade flows independently when needed. Just as importantly, it allows the country to build capabilities in marine underwriting, claims management and maritime law, areas where domestic expertise has historically been limited.

However, the significance of this move becomes clearer when placed within the broader transformation underway in India’s maritime sector. Over the past year, the government has carried out one of its most extensive reform exercises in decades. Five major maritime laws have already been advanced to modernise outdated frameworks governing ports, shipping and cargo. These reforms aim to align India with global conventions while improving efficiency and competitiveness.

Parallel to this legal overhaul has been a major push to rebuild the financial backbone of the sector. The creation of a dedicated maritime financing ecosystem, including a sector-focused NBFC in the form of Sagarmala Finance Corporation, addresses the longstanding shortage of low-cost, long-tenure capital for Indian shipping companies. This is complemented by the operationalisation of a Rs 25,000 crore Maritime Development Fund, which is expected to support ship acquisition, port infrastructure and logistics.

These initiatives come against a backdrop where India’s port capacity has expanded to over 2,600 million tonnes per annum, supported by investments exceeding Rs 5 lakh crore across ports, shipping and inland waterways. At the same time, regulatory frameworks enabled by institutions such as the International Financial Services Centres Authority (IFSCA) are bringing ship leasing and financing activities onshore. Emerging mega ports, such as Vizhinjam in Kerala and Vadhavan in Maharashtra, are being positioned as global transshipment hubs.

Seen together, these moves represent a clear strategic pattern. India is not merely upgrading infrastructure. It is attempting to control the full maritime stack, from ports and ships to finance and now insurance. BMI Pool fills a critical gap in this chain. Without domestic control over risk underwriting, even the most advanced ports or fleets remain vulnerable to external shocks.

India’s approach also mirrors a broader global reality. Major maritime powers have long ensured that insurance capacity is either domestically anchored or strategically aligned. The United Kingdom, through Lloyd’s of London, remains the world’s leading marine insurance hub, hosting a deep and globally integrated underwriting market. Norway has built a specialised ecosystem around players such as Gard, tightly linked to its shipping industry.

Japan combines private insurers with sovereign backing through Nippon Export and Investment Insurance, ensuring coverage for strategic trade flows. China has gone further, building state-backed giants such as China Export & Credit Insurance Corporation and People’s Insurance Company of China to insure its vessels and overseas projects, even under geopolitical stress.

In different ways, each of these countries has ensured that maritime insurance is not left entirely to external markets. India, until now, lacked such a domestic backstop. There is also a deeper intellectual underpinning to this shift. It draws from the idea of swadeshi, articulated by the Rashtriya Swayamsevak Sangh (RSS). “At the same time, it is reinterpreted for a globalised economy. The emphasis is no longer on isolation but on resilience. India seeks to remain integrated with global trade while ensuring that critical capabilities are not entirely dependent on external actors,” says Ashwani Mahajan, economist and national co-convenor of RSS affiliate Swadeshi Jagran Manch.

For the past decade, Mahajan and his associates had been lobbying with the Modi government to build this muscle in order to create an alternative to money dominance of the western world (US and Europe) and China-controlled vessels. In this sense, BMI Pool is as much about strategic autonomy as it is about insurance.

India is still at an early stage. With an initial underwriting capacity of Rs 950 crore, the pool is modest relative to the scale of maritime risk it seeks to cover. Building credibility, actuarial depth and global trust will take time. There is also the challenge of maintaining financial discipline in a sovereign-backed framework.

Yet the direction is unmistakable. BMI Pool is not an isolated policy move. It is part of a broader reorientation of India’s economic strategy, one that recognises that in a world shaped by geoeconomics, control over the instruments of trade is as important as participation in trade itself.

The lesson from the Russia-Ukraine war was clear. Supply chains do not break only when goods are unavailable. They break when the systems that enable movement, finance and risk management are disrupted. By stepping into maritime insurance, India is attempting to ensure that its trade does not stall when those systems come under strain. And in doing so, it is signalling a shift from dependence to resilience, from participation to partial control. The seas may remain global, but the ability to navigate them increasingly depends on who underwrites the risk.

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