Indian Shipbuilding & Manufacturing - Opportunities for Norwegian MarineTech

Introduction

In the first week of June 2024, the Norway India Business Day began with various industry sectors pitching for collaborations and investments in India. Sectors within the 'Blue Economy' were particularly highlighted, given the recent signing of the European Free Trade Association (EFTA)–India Trade and Economic Partnership Agreement (TEPA) and the Joint Commission blueprint between India and Norway, in 2020. The breakout session on 'Shipbuilding and Manufacturing - Opportunities for Norwegian MarineTech' offered insightful takeaways.

Outlook

Commercial shipbuilding orders in India have surged to unprecedented levels. Recently, numerous European customers have placed orders totalling USD 750 million, and the Indian Navy has allocated USD 3.5 billion from the national budget this year alone.

- An ageing European coastal fleet, troubled by new environmental regulations, sends many vessels to scrapyards. There is an urgent need for shipbuilding capacity to produce new tonnage and replace the fleet.

- The Indian government is consistently increasing its budget allocation for the Navy, aiming to spend USD 50 billion by 2030 to strengthen its 'Blue Navy' capabilities.

- Coastal trade, fisheries, port infrastructure, and research vessels are receiving significant governmental support, with investment grants and schemes for substantial development.

Shipbuilding

Government-owned shipyards have shown immense growth potential, driven by orders from both Indian and foreign defence sectors. As a result, many private shipyards have secured subcontracts due to capacity constraints at government-owned facilities. This has revived financially stressed shipyards and enabled them to expand capacity, improve productivity, and enhance quality. The Indian government's policy initiatives and financial support through schemes such as the Maritime India Development Fund, provide the necessary impetus to the shipbuilding industry.

Commercial shipbuilding orders are on the rise, with Indian shipowners expanding their fleets. The Indian government is emphasizing the procurement of services delivered by Indian-built and flagged vessels. As of March 2023, 433 ships were on the order book, with 125 at public sector shipyards and 308 at private sector shipyards. Of the 125 at public sector yards, 106 were domestic orders and 19 were export orders. Of the 308 at private sector yards, 292 were domestic orders and 16 were export orders. In terms of tonnage, public-sector and private-sector shipyards accounted for 53.8% (134.55 thousand DWT) and 46.2% (115.39 thousand DWT) of the order book, respectively.

Manufacturing Cluster

To make the Indian shipbuilding industry internationally competitive, longstanding issues of financing and interest rates have been partially resolved. However, further support, like that received by the electronics, automobile, and pharmaceutical industries, is needed. Another factor supporting competitiveness is the development of home-grown supply chains. The government is actively promoting the formation of maritime clusters to boost investments in the industry's supply chain. Indigenous content in shipbuilding projects has increased from 40% to 60% over the past decade, with a target of 80-90%. This goal will require favourable tax regimes, grants, suitable infrastructure, and trained manpower.

Intellectual Property (IP)?

Intellectual Property (IP) rights have been a concern in India. In 2016, India formulated the National Intellectual Property Rights (IPR) policy. This policy aims to modernize and strengthen existing IPR laws to balance the interests of IP owners and the public, combat IPR infringements, and raise awareness about IPR. The Copyright (Amendment) Rules, 2021, effective from March 2021, introduced significant changes regarding copyright societies, including their registration, management, and functions.

EFTA-India Agreement?

The EFTA-India TEPA agreement was signed in March 2024. EFTA, comprising Iceland, Liechtenstein, Norway, and Switzerland, is an intergovernmental organization promoting economic cooperation and free trade in Europe.

A distinctive and unprecedented element of the India-EFTA trade deal is the binding commitment by the EFTA bloc to invest $100 billion in India over the next 15 years. Investments will focus on manufacturing companies in India within industries such as chemicals, pharmaceuticals, machinery, and food processing, some of the nation’s primary exports, along with service exports like IT services and accounting. Investments will also target infrastructural sectors. Strategic priorities include foreign investments, bilateral trade, tariff reductions, and simplifying trade procedures between India and the EFTA bloc, specifically applicable to machine equipment (including maritime) and high-value items.

Conclusion

Early signs of a new trend are emerging in India, shifting from an agriculture-based economy to one based on manufacturing and services. These developments provide mutually beneficial opportunities for Norway-India collaboration in the maritime sector, particularly in shipbuilding and supply-chain manufacturing. Norway possesses the technology, OEMs, and optimal designs to match the types and sizes of vessels prevalent in Indian shipyards. Simultaneously, India has significantly increased its shipbuilding capacities, with 20 small and medium-sized shipyards ready for action. The current geopolitical situation has led to the concept of 'friendshoring,' where trading with friendly nations becomes the norm. Norwegian OEMs and technology leaders have a golden opportunity to capitalize on India's enhanced marine focus, collaborating on R&D and commercialization efforts to drive long-term sustainable shipping.

A big Thank you to our speakers for sharing your thoughts :

Arjun Chowgule - Shipyards Association of India

Norman Hansen Meyer - Schj?dt

Ivar Vebostad - Kongsberg Maritime

Thanks, Stian Prit Singh Gahlla for the preparations and co-hosting the session and edits to the article.

Norway India Chamber of Commerce and Industry , Nor-Shipping , Norwegian Maritime Exporters NME , Norwegian Shipowners' Association (Norges Rederiforbund) , Bergens Rederiforening (Bergen Shipowners' Association) , Ocean Industry Forum Oslofjord , GCE Blue Maritime Cluster , Norsk Skipsmeglerforbund Embassy of India, Oslo Maritime & Merchant Bank Embassy of India, Oslo