The government has approved the Bharat Maritime Insurance Pool, a new domestic shipping insurance mechanism backed by a sovereign guarantee of nearly Rs 13,000 crore.
The move comes after months of rising tensions across key global trade routes, where conflict risk has pushed insurance costs sharply higher.
For most readers, marine insurance may sound like a technical subject that has no impact on their lives. But when conflict pushes up shipping costs, the effect can quietly travel into fuel prices, imported goods, raw materials and everyday household expenses.
And for a country like India, which depends heavily on sea routes for trade, that risk cannot be ignored.
Government estimates show more than 70% of India’s trade by volume and nearly 95% by value moves through maritime routes. Crude oil, gas, fertilisers, machinery, electronics and everyday goods all travel through these channels.
India Today had earlier reported that tensions in , especially for vessels moving through the Strait of Hormuz.
That helps explain why the government has moved now.
The new pool is essentially a .
Instead of depending largely on foreign insurers and reinsurers during global disruptions, Indian insurers will jointly provide cover for key maritime risks.
This includes damage to ships, cargo losses, liabilities such as pollution or crew injury, and war-risk cover for vessels operating in conflict-prone waters.
According to Balasundaram R, Head of Marine Insurance at Policybazaar for Business, the pool is designed to cover vessels that are Indian-owned, controlled by Indians, or carrying cargo to and from Indian ports.
“It will span the full spectrum of marine risks, including Hull & Machinery, cargo, war risk, and Protection & Indemnity (P&I) — essentially covering almost the entire gamut of marine insurance needs,” he said.
It will support Indian-flagged and Indian-controlled vessels, including those carrying cargo linked to India.
In simple terms, if overseas insurers become too expensive or too cautious during a crisis, India wants a backup system in place.
India’s maritime sector has long relied on foreign insurance markets. That works when the world is stable. It becomes a weakness when wars, sanctions or attacks disrupt shipping routes.
Premiums can jump overnight. Cover can tighten. Trade costs can rise.
The Bharat Maritime Insurance Pool is meant to reduce that dependence and give Indian trade a degree of protection from external shocks.
Shipping Minister Sarbananda Sonowal described the decision as a “transformational step”, saying Indian shipping had remained exposed to uncertainties dictated by foreign insurance markets.
He said the mechanism would give India the sovereign capacity to safeguard maritime trade even in difficult global conditions.
Balasundaram R said the pool will be managed by GIC Re, with participation from other insurers contributing capacity. The initial capacity is expected to be around USD 100 million, or roughly Rs 950 crore.
“The sovereign guarantee by the Government of India, estimated at around USD 1.4 billion, effectively positions the government as an insurer of last resort, especially in scenarios where global reinsurance or retrocession capacity is constrained,” he said.
That is the real message behind the policy. This is not just about insurance. It is about strategic control over a critical layer of trade infrastructure.
Countries such as the United Kingdom, Japan and South Korea already have systems to protect maritime trade interests. India is now building its own cushion.
Shipping companies may get more certainty during volatile periods. Exporters and importers may face fewer disruptions. Logistics firms could gain better visibility on costs.
There may also be a consumer benefit over time. If freight and insurance costs remain more stable, pressure on imported goods and supply chains can ease.
The Bharat Maritime Insurance Pool shows how global risk is changing economic policy.
What once looked like a niche financial product is now tied to energy security, trade competitiveness and inflation.
“The broader objectives behind this move signal a strong strategic intent — enhancing self-reliance, building resilience against global sanctions, and ensuring greater sovereign control over critical maritime risks,” Balasundaram R said.