India is seeking investment and technology transfer from South Korea and Japan to set up shipbuilding and repair clusters to promote the domestic shipping supply chain in the country, according to a senior government official.
Currently, India holds less than 1 percent of the global shipbuilding market, dominated by China, South Korea and Japan.
“We are looking at South Korea and Japan for investments and technology transfer to set up shipbuilding and repair clusters in India,” TK Ramachandran, Secretary, Ministry of Ports, Shipping and Waterways (MoPSW), told a group of reporters here.
Ramachandran was in Goa to participate in the 20th Maritime State Development Council (MSDC), where plans for a mega shipbuilding park spanning several states were discussed.
“We have told them (South Korea and Japan) that you are coming with your technology and investments and we will provide you with land to establish shipbuilding and repair centres,” he said.
The secretary said an Indian delegation met with South Korean officials and entities to assess their interest in investing in India for setting up shipbuilding and repair facilities at its proposed mega shipbuilding parks. It is proposed that Japan conduct a similar exercise to assess its interest in shipbuilding in India.
Ramachandran also said that Union Minister for Ports, Shipping and Waterways Sarbananda Sonowal has written to chief ministers of all states to provide land immediately if Japanese or Korean companies express interest in setting up shipbuilding and repair clusters in their states.
“At least three states have expressed interest in providing land for setting up shipbuilding and repair centres,” he said, without naming the states.
Ramachandran said India wants to replicate in its domestic shipbuilding industry the automotive revolution that began with an attempt to lure Japanese automaker Suzuki Motor Corp. in the 1980s to set up Maruti Suzuki India Ltd.
The ministry’s aim is to elevate India from 22nd place in global shipbuilding to one of the top 10 shipbuilding hubs by 2030 and one of the top 5 by 2047, he added.
The secretary hinted that South Korea’s Hanwha Ocean Co. Ltd and Samsung Heavy Industries and Japan’s Mitsubishi Shipbuilding Co. Ltd and Mitsui Engineering are possible candidates to set up shipbuilding and repair infrastructure in the country.
According to him, this ambitious initiative aims to consolidate shipbuilding capabilities in all regions, fostering greater efficiency and innovation.
Ramachandran said India’s proposed Rs 25,000 crore Maritime Development Fund (MDF) – which seeks to provide long-term, low-cost financial support and boost indigenous shipbuilding – will basically be equity financing.
“The capital funding will come from the Centre, state-owned companies, pension funds and the private sector,” he said.
Noting that currently 95 per cent of India’s foreign trade is carried out through foreign-owned and foreign-flagged vessels, generating an outflow of USD 110 billion annually from India, Ramachandran said nearly 60 per cent of the country’s ship repair work is done outside the country.
“The financing ecosystem (for the shipping industry) does not exist in India. The entire value chain financing, insurance, ship ownership, leasing, recycling and ship repairs are done abroad,” he said.
India’s fleet currently numbers 1,526 vessels with a gross tonnage (GT) of 14 million as of December 2023. However, around 44 per cent of these vessels are more than 20 years old, indicating the need for replacement in the coming years.
Currently, India spends around $75 billion annually on leasing ships from abroad. India holds around 2 per cent of the world’s total tonnage. Maritime India Vision 2030 (MIV 2030) aims to take Indian shipbuilding and repair into the top 10 globally, while Amrit Kaal Vision 2047 sets an even more ambitious target of reaching the top five.
According to an official statement, if Indian shipyards adequately cater to the huge demand arising from the needs of the Indian shipping market, an opportunity of over $237 billion (around Rs 20 lakh crore) could emerge by 2047.
(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First published: September 15, 2024 | 20:08 IS
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