India has approved a sovereign guarantee worth 129.8 billion rupees (approximately US$1.4 billion) to establish a national maritime insurance arrangement aimed at strengthening protection for shipping activities amid global geopolitical and market uncertainty.
The decision was cleared at a Cabinet meeting chaired by the Prime Minister of India, Narendra Modi, on Saturday (18 April). The announcement was later formally made by Information and Broadcasting Minister Ashwini Vaishnaw.
Under the approved framework, India will set up the India Maritime Insurance Pool (BMIP), which is designed to ensure uninterrupted insurance coverage for shipping and trade even during periods of international disruption. The pool will initially operate for 10 years, with a provision for extension of up to five additional years depending on requirements.
The initiative is intended to address situations where global insurers reduce exposure or withdraw coverage during periods of heightened risk, such as armed conflict, sanctions, or political instability. In such circumstances, shipping operations often face difficulties in securing adequate insurance, increasing costs and disrupting trade flows.
The BMIP will provide coverage across multiple key segments of maritime insurance, including hull and machinery, cargo, protection and indemnity (P&I), and war risk insurance. It will apply to Indian-flagged vessels, India-controlled ships, and vessels engaged in India’s import and export trade.
Domestic insurance companies will jointly underwrite policies under the pool, supported by the sovereign guarantee from the Government of India. This structure is intended to reduce dependence on international insurance markets while strengthening the capacity of India’s domestic insurance sector.
The decision comes against a backdrop of heightened global maritime risk, including tensions involving Iran, sanctions imposed on Russia, and security concerns in strategic maritime corridors such as the Strait of Hormuz, a critical chokepoint for global energy shipments. In recent periods, international insurers have reportedly adjusted premiums upward or restricted coverage in response to these risks, contributing to higher shipping and import costs, particularly for energy commodities.
Key Features of the India Maritime Insurance Pool
| Component | Details |
|---|---|
| Financial backing | ₹129.8 billion sovereign guarantee (approx. US$1.4 billion) |
| Name | India Maritime Insurance Pool (BMIP) |
| Initial duration | 10 years |
| Extension option | Up to 5 additional years |
| Coverage types | Hull & machinery, cargo, P&I, war risk |
| Beneficiaries | Indian-flagged vessels, India-controlled vessels, India-linked trade ships |
| Structure | Domestic insurers operating under government-backed guarantee |
Officials have indicated that the pool is expected to reduce reliance on overseas insurers and improve cost efficiency in securing maritime coverage. It is also intended to enhance resilience in India’s trade logistics by ensuring continuity of insurance availability during periods of international market stress.
The initiative is widely regarded as a strategic step aimed at strengthening the country’s maritime financial infrastructure and improving preparedness for external shocks affecting global shipping and trade routes.