Revitalizing India's Shipbuilding and Maritime Ecosystem
The Indian government has announced a new package of ₹69,725 crore to enhance the shipbuilding and maritime sector, replacing the previous package set to expire in March 2026. The aim is to significantly expand India's capacity to construct large merchant ships, targeting 4.5 million gross tonnage.
Current Challenges in Indian Shipbuilding
- Indian shipyards have historically focused on defence orders, building only a few small merchant ships in the last decade.
- The capability to build large merchant vessels is limited, with significant deficiencies in technology and management practices.
- Indian shipyards lack the infrastructure for modern shipbuilding techniques, such as prefabricating component blocks outside the dry dock.
- The turnaround time for building ships in India is about two to three years, resulting in prolonged capital investment without returns.
Global Practices
- Countries like Korea, Japan, and China have advanced shipbuilding by using prefabricated blocks, reducing build time significantly.
- Shipyards in these countries utilize large cranes and ample space for efficient assembly line processes.
Proposed Solutions and Incentives
- Upgrading shipyards with cutting-edge technology and management principles.
- Establishing clusters for shipbuilding ancillaries to support new shipyards.
- Providing financial support for shipowners to invest in new builds.
- Introducing incentives that include long-term offtake opportunities to ensure demand visibility for Indian shipowners.
- Leveraging India's green fuel projects to support the building and offtake of green ships.
Conclusion
To address the challenges, India must start with smaller ships of 500 gross tonnage and above, promoting long-term shipping contracts and time charters. This initiative aims to spur shipbuilding by providing visibility and reducing cost overruns from delays.
