India Launches P&I Club to Boost Domestic Shipping

In a strategic move that could redefine India’s maritime landscape, the Ministry of Ports, Shipping and Waterways is set to launch India Club, the country’s first indigenous Protection & Indemnity (P&I) insurance entity. Designed to reduce dependency on foreign insurance clubs and bolster India’s maritime sovereignty, the initiative is now under active feasibility study and is expected to go live by early 2026.

This marks a significant pivot in India’s shipping policy, with potential ripple effects on MSMEs, logistics firms, shipowners, and cargo handlers that currently depend on foreign P&I insurers based in London or Europe.

What Is a P&I Club—and Why Does India Need One?

A Protection and Indemnity Club provides third-party liability insurance for shipowners and operators, covering everything from oil spills, cargo damage, and crew injury to collision liabilities and environmental hazards. The global maritime sector is largely covered by the International Group (IG) of P&I Clubs, which currently insures over 90% of ocean-going tonnage.

India, with over 1,500 registered Indian-flagged merchant vessels (as of FY24), currently lacks a domestic P&I club. This creates over-reliance on foreign reinsurers, which proved risky during global sanctions, war risks, or currency fluctuations.

“Launching India Club is not just a financial reform—it’s a strategic shield for the maritime economy,” said T.K. Ramachandran, Union Shipping Secretary. “It will empower local shipowners, protect MSME exporters, and help keep insurance premiums and payouts within Indian jurisdiction.”

 Key Industry Data

• India's merchant fleet size (FY24): 1,516 vessels, 13.1 million gross tonnage

• Value of cargo handled at Indian ports (FY24): Over ₹1,800 lakh crore

• Estimated annual third-party liability premium paid abroad: ₹3,000–₹5,000 crore

• Projected size of India Club premium pool in 1st year: ₹1,000 crore (initially domestic routes only)

(Source: DG Shipping, Ministry of Ports)

How Will India Club Work?

The India Club is proposed to operate as a mutual insurance association, where shipowners and maritime businesses are members and contributors. Premiums—also called “calls”—are pooled, and claims are paid from the collective fund.

The model is being structured with support from public-sector insurers like New India Assurance, GIC Re, and possibly private reinsurance players. The Insurance Regulatory and Development Authority of India (IRDAI) will be the regulator.

A government-appointed consultancy firm is currently evaluating technical feasibility, governance structure, and risk appetite. The final report is expected by Q4 FY25, followed by Cabinet approval.

Why This Matters for MSMEs

If the Central's plan worked, this initiative would be a benchmark for its cost efficiency, making domestic premiums cheaper up to 30%, especially for coastal and inland routes. This initiative can also open access to niche markets like smaller vessels, fisheries, barges, and river transport, which often find foreign P&I terms unaffordable or unsuitable. Boost to Inland Waterways & Sagarmala Projects, Reduced insurance friction may enhance the viability of coastal shipping corridors, benefiting MSME supply chains in states like Gujarat, Tamil Nadu, Odisha, and Assam.

Global Context: Rising Need for Insurance Sovereignty

India’s move mirrors similar strategies adopted by China (China P&I Club) and Russia, both of whom sought to shield their shipping sectors amid geopolitical turbulence. Notably, India’s maritime trade with Russia surged by over 200% in FY24, primarily due to discounted oil shipments, which often faced insurance and port access hurdles due to sanctions on Russian vessels.

Having a domestic P&I insurance could provide India the strategic autonomy needed to operate even under future trade or shipping sanctions.

Challenges Ahead

• Limited Tonnage Pool: Many Indian shipowners flag vessels in foreign jurisdictions to bypass local taxes or labour regulations.

• Global Recognition: It may take years for the India Club to be accepted by international ports and trade partners.

• Reinsurance Dependency: High-value claims (e.g., oil spill cleanup) may still require international reinsurance until India builds adequate reserve capital.

What Lies Ahead

The formation of the India Club could align with the government’s broader ambitions under PM Gati Shakti, Sagarmala, and Make in India, by localising control over strategic maritime assets and liabilities.

With India's inland and coastal waterways poised to become the next logistics frontier for MSMEs and exporters, a homegrown P&I insurer could become the much-needed safety net.