Build-up for sea change

The maritime sector accounts for around 95 per cent of India’s trade by volume and 70 per cent by value. It is handled by 13 major and over 200 minor and intermediate ports along a 7,517-km-long coastline and islands. In addition, there are over 14,000 km of inland waterways. That said, India is 22nd in the pecking order among ship-building countries, accounting for less than 1 per cent of the global market. China, South Korea and Japan are the world’s top three ship builders, collectively controlling 85 per cent of the industry.

In 2022, India’s ship-building industry was valued at $1.12 billion (Rs 9,814 crore) and is projected to reach $8.12 billion (Rs 71,162 crore) by 2033, according to industry projections. This translates to a compound annual growth rate (CAGR) of 60 per cent. The Shipbuilding Global Market Report 2024 has estimated the CAGR from 2023 to 2024 at 6.5 per cent.

Presenting the Union Budget for 2025-26 on February 1, Finance Minister Nirmala Sitharaman proposed to set up a Maritime Development Fund with a corpus of Rs 25,000 crore for long-term financing for the maritime industry. “Ship-building clusters will be facilitated to increase the range, categories and capacity of ships. This will include additional infrastructure facilities, skilling and technology to develop the entire ecosystem,” she said.

The Ship-building Financial Assistance Policy, she said, will be revamped to address cost disadvantages. “This will include credit notes for shipbreaking in Indian yards to promote the circular economy and large ships above a specified size will be included in the infrastructure harmonised master list (HML),” she added.

A report released by the Union Ministry of Ports, Shipping and Waterways in July last year reveals that India has a merchant fleet strength of 1,526 vessels. There are plans to establish a new shipping company to expand its fleet by at least 1,000 ships within a decade, aimed at cutting foreign freight costs by one-third by 2047 and increasing the trade revenue. This opens up immense opportunities for the indigenous ship-building and ship-repairing industry.

The allocation under the head for ‘assistance to ship- building, research and development’ for 2025-26 has been pegged at Rs 365 crore, a two-and-a-half-fold increase over the revised estimates of Rs 150 crore for 2024-25. The actual expenditure under this head for 2023-24 was Rs 99.12 crore. This provision, a part of the proposed annual allocation of Rs 3,470.58 crore for the ministry, is for grants-in-aid for research and development schemes and financial assistance to all Indian shipyards, which construct, repair and refit ships.

Setting new targets

India has an ancient maritime tradition due to its coastal regions and proximity to sea lanes of communication, but post-Independence, ship-building has not kept pace with international players, even though the country has developed significant technological capability to build large vessels, especially warships. The production of indigenous ships for the Indian Navy over the past two decades is notable. As part of its Maritime India Vision-2030, a strategic initiative launched by the government to strengthen the country’s maritime sector over the next decade, the ministry aims to elevate India’s position in global ship-building to the top 10 by 2030 and the top five by 2047.

By the end of this period, the ministry has estimated, if the demand for India’s shipping market is “adequately targeted by Indian shipyards”, it may create economic opportunities to the staggering extent of $237 billion (Rs 20.77 lakh crore). Research by industry think-tanks has suggested that to achieve this target, the annual output of Indian shipyards needs to be increased from the present 0.07 million gross tonnage (MGT) to 0.33 MGT by 2030 and to 11.31 MGT by 2047, which is highly ambitious by any standards.

A robust and thriving ship-building industry, both in the military and merchant domains, is critical to national interest and the pursuit of self-reliance. While the military aspect is dealt with separately by the Ministry of Defence, also involving the Indian Navy, the Defence Research and Development Organisation, Defence Public Sector Undertakings and the industry, the intrinsic nature and expansiveness of the ship-building industry involves a strong interplay between defence and civilian establishments in terms of sharing infrastructure, dockyard facilities, technology, research and development and commonality of certain components and sub-systems, service, repair and maintenance.

Ship-building in India was for long dominated by the public sector, though the private industry is also making deep inroads. There are 53 shipyards in the country, seven under the public sector, two under state governments and 44 in the private sector, besides about 700 commercial entities associated with this. Ship-building has spin-offs for a host of other industries, including steel, engineering equipment, electronics, electrical, tools, furnishing, port infrastructure, consultancy and allied services, besides generating employment.

According to the ministry, the maximum size of the vessels which can currently be built by the Indian public sector is 1,10,000 Deadweight Tonnage (DWT), the maximum weight of a ship when fully loaded. It is being increased to 3,00,000 DWT by Cochin Shipyard Limited, the biggest shipbuilding and maintenance facility that constructed the aircraft carrier INS Vikrant, the largest ship to be built in India. Private sector shipyards, the ministry states, can build vessels up to cape size vessels comparable to some of the leading shipyards in the world. Reliance Naval Engineering Limited has the capacity to build vessels up to 4,00,000 DWT and L&T Shipbuilding of 3,00,000 DWT, which includes large LNG carriers.

The ministry, in its annual report, has also pointed out that a positive outlook at global levels has resulted in build-up of interest and increased enquiries to Indian yards, but lack of infrastructure in the country due to the collapse of many private shipyards resulted in erosion of capacity, Furthermore, no proper financing mechanism was a big deterrent to attract the attention of the leading shipowners and market players.

DEALING WITH CONSTRAINTS

While favourable winds are blowing over the industry, there are still choppy waters to navigate. Ship-building is a complex and multi-disciplinary process requiring a highly trained workforce, vast infrastructure, access to technology, heavy financial support and a secure supply of raw materials.

Notwithstanding the government’s recent initiatives to boost the industry and certain existing advantages like India’s strategic location, strong technological base, low-cost manpower and focus on niche segments, there are issues that require immediate redressal. These, experts say, include lack of a competitive ship-building ecosystem which is plagued by long construction timelines and quality standards, high capital costs, heavy dependence on imported raw materials and components, infrastructure bottlenecks and the slow pace of modernisation and automation.

What’s required

Dry cargo liners

Container ships

Dry cargo bulk carriers

Ore or crude bulk carriers

Oil tankers

Passenger-cum-cargo vessels

Acid carriers

Timer carriers

LPG carriers

Trawlers

Offshore supply vessels

GOALS LAID OUT

Facilitating the construction of river sea vessels, inland vessels, barges and fishing vessels.

Encouraging use of new technology, especially in the construction of vessels which use alternative fuels, ensuring that top global suppliers of advanced equipment stock and assemble their products in India.

Ensuring that all government and public sector-owned vessels are built in India.

Figures that matter

22

India’s ranking among ship-building countries, accounting for less than

1 per cent of the global market.

53

Shipyards in the country, of which 44 are in the private sector.

1,526

Strength of India’s merchant fleet

1,000

The number of new ships planned within a decade