Sailing Strong: The Global Impact of India’s Shipbuilding Industry

India has a rich maritime history, and its shipbuilding industry has long played a crucial role in global trade and naval defence. Inspired by this legacy, India is working towards establishing a strong commercial and defence shipbuilding sector. The government is actively supporting this vision through key policy initiatives and infrastructure development.

Let’s explore the major innovations, emerging technologies, and the opportunities and challenges faced by India’s shipbuilding sector as it navigates a rapidly changing maritime landscape.

Current Market Value

India’s shipbuilding industry is witnessing remarkable growth. According to Finextra Research, the market was valued at just $90 million in 2022 but is projected to reach $8.1 billion by 2033, reflecting an unprecedented 60% CAGR. This growth is driven by strong government support, strategic location, low labour costs, and a focus on niche sectors like offshore support vessels and ferries.

The Ministry of Ports estimates that, with the right strategy, Indian shipyards could capitalise on the domestic shipping market’s exponential demand, potentially valuing the shipbuilding industry at $237 billion (Rs 20 trillion) by 2047.

Challenges in India’s Shipbuilding Industry

Here are some of the major challenges facing the sector:

• Lack of Financial Support: Shipbuilding is capital-intensive, requiring substantial working capital to cover 20-25% of total ship construction costs. Affordable funding is scarce, with interest rates on loans ranging from 10-10.5% in India, compared to 4-8% in global hubs.
• Quality and Skill Deficits: While India benefits from low labor costs, the skill and quality of the workforce remain challenges. The absence of formal training in this sector hampers productivity.
• Technological Constraints: India’s reliance on outdated technologies and foreign supplies for critical raw materials hinders its growth. Any disruption in global supply chains could have severe consequences for the industry.

International Collaboration

The Indian government is keen to develop the country as a key player in the global shipbuilding industry. It has initiated talks with Japan and South Korea — leaders in shipbuilding — focused on joint collaboration for shipbuilding and repair facilities. These discussions aim to secure financial support and technology transfer to bolster India’s shipbuilding infrastructure.

Currently, India ranks 22nd in shipbuilding capacity, with aspirations to break into the top 10 by 2030 and the top 5 by 2047. India currently contributes less than 1% to global ship tonnage, but by gaining control of the domestic shipping market, Indian shipbuilders aim to contribute 5% to global tonnage.

Mega Shipbuilding Parks

At the 20th Maritime State Development Council, the government announced plans to establish two state-of-the-art mega shipbuilding parks by 2030. The long-term goal is to develop four parks, with two on each coast. States like Gujarat, Maharashtra, Andhra Pradesh, and Odisha have expressed interest in the project.

These parks will be developed through public-private partnerships (PPP). Basic infrastructure like roads, power, rail lines, housing, and water will be provided by the state, while private players will bring in modern technologies and equipment, such as cranes, heavy machinery, and dry-docking tools.

Investment Trends

Historically, India’s shipbuilding landscape has been dominated by public sector undertakings (PSUs) such as Mazagon Dock Limited and Cochin Shipyard Limited, pioneers in commercial and defence shipbuilding. The Adani Group is also making significant inroads into the sector, planning to invest Rs 45,000 crore to build a shipyard at Mundra Port. With major global shipyards booked until 2028, Adani aims to target the rising demand for eco-friendly vessels, projected to become a $62 billion market by 2047.

Other major players include Hindustan Shipyard Limited, Garden Reach Shipbuilders & Engineers Limited, and L&T Shipbuilding.

What’s Next?

The Ministry of Ports has unveiled its Maritime Vision Document 2030, aiming to position India’s shipbuilding and repair industry among the top 10 globally by 2030. According to a KPMG report, for India to achieve this goal, the total output of its shipyards must increase from 0.072 million gross tonnage (GT) to 0.33 million GT.

To become a global shipbuilding hub, India needs to modernise its infrastructure, adopt advanced technologies, and foster an innovation-driven ecosystem. Collaboration between shipbuilders, the government, research institutions, and global players will be key to ensuring competitiveness and long-term growth.

That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!

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