New Delhi seeks maritime makeover with Korean and Japanese Shipbuilders
In a discreet yet significant move, a high-level Indian shipping delegation visited South Korea last month. The mission was clear: to showcase India’s maritime growth potential and attract collaboration from South Korea’s shipbuilding giants. Led by shipping secretary T K Ramachandran, the delegation included prominent figures from both the government and the private sector, such as Madhu S Nair, chairman of Cochin Shipyard Ltd (CSL). The visit, described as a “study tour” by the Indian embassy in Seoul, aimed to explore partnerships that could bolster India’s shipbuilding capabilities.
The delegation’s interactions with major industry players like Hyundai Heavy Industries and Samsung Heavy Industries highlight India’s ambition to enhance its shipbuilding sector. With recent investments, including a new dry dock in Kochi worth Rs 1,800 crore, Indian shipyards are poised for growth. However, industry leaders emphasize the need for a comprehensive ecosystem of ancillary facilities to support shipbuilding efforts. As India seeks to pivot away from reliance on Chinese collaborations, the focus is now on forging ties with Korean and Japanese shipbuilders.
The Challenge of Competing with China
China’s dominance in the global shipbuilding industry poses a significant challenge for India. Currently, China commands an astonishing 65% of the market share, with South Korea and Japan controlling a combined 93%. In stark contrast, India ranks a distant 17th, holding a mere 0.07% of the global shipbuilding market. According to the Ministry of Ports, Shipping and Waterways, India operates only 1,530 vessels, totaling 13.7 million gross tonnage (GT). This disparity underscores the urgent need for India to strengthen its shipbuilding capabilities.
Industry experts, including Madhu S Nair, stress the importance of establishing a robust domestic shipping industry to drive demand for shipbuilding. Without a strong fleet of Indian shipping liners, private shipyards may struggle to survive. The government has recognized this challenge and is taking steps to address it. Recent legislative efforts, such as the Merchant Shipping Bill and the Coastal Shipping Bill, aim to simplify regulatory processes and liberalize licensing for Indian vessels. However, these measures alone may not be sufficient to stimulate shipbuilding growth.
To further bolster the industry, the government is pooling ship requirements from various public sector companies. This initiative aims to create a ready-made demand for Indian shipbuilders, attracting foreign partnerships and investments. With projections indicating a need for 50 oil tankers over the next 15 years, the government is keen to reduce reliance on foreign vessels and promote domestic production.
A Resurgence in Global Shipbuilding
The global shipbuilding industry is currently experiencing a remarkable resurgence after years of stagnation. Factors such as the need to replace aging vessels and tightening environmental regulations are driving demand for new ships. Shipowners are increasingly seeking alternative fuels, which has created a surge in orders across the industry.
India’s shipyards, particularly CSL, are well-positioned to capitalize on this revival. CSL has secured contracts to build 65 ships, including advanced vessels for offshore wind farms. However, not all players in the industry have weathered the storm. Many shipyards that thrived in the early 2000s have succumbed to financial difficulties, while those focused on defense contracts have managed to survive.
To enhance competitiveness, Indian shipyards are looking to collaborate with major Korean and Japanese shipbuilders. Such partnerships could facilitate the adoption of global best practices and improve productivity. As the government considers revisions to the Shipbuilding Financial Assistance Scheme, there is hope for a more supportive environment for shipbuilding in India.
The overarching goal is to replicate India’s success in the automotive sector within the shipbuilding industry. By fostering a strong domestic shipping market and attracting foreign investments, India aims to transform its shipbuilding landscape. As global dynamics shift, the urgency to build a resilient and competitive shipbuilding industry has never been clearer.
