India calls on South Korea and Japan to participate in ‘Maruti moment’ of domestic shipbuilding

India is seeking investment from Korean and Japanese shipbuilders as part of its ambitions to establish the country as a major global shipbuilding hub.

An Indian delegation has met South Korean officials and entities to gauge their interest in investing in India to set up shipbuilding and repair facilities at its proposed mega shipbuilding parks. It is proposed that Japan undertake a similar exercise to gauge its interest in shipbuilding in India.

“We are considering the possibility of Korea building shipbuilding infrastructure in the country. The talks are focused on both financing and technology transfer. A similar activity is also underway with Japan,” said TK Ramachandran, secretary of the Ministry of Ports, Shipping and Waterways.

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.

“Three coastal states have already expressed their willingness to provide land for shipbuilding and repair. Now, we will partner with companies to create this cluster,” Ramachandran said.

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“Domestic shipbuilding will help achieve the government’s target of controlling at least 5% of the world’s tonnage. Currently, we have less than 1% of the world’s tonnage. It is not enough to achieve the economic growth and development envisaged for the nation,” said Pushpank Kaushik, CEO of Jassper Shipping, a Singapore-based logistics and transportation services provider.

“Domestic shipbuilding will not only support Indian shipowners but will also become an alternative destination for shipbuilding away from Vietnam, Korea, Japan and China.”

The Maruti moment in Indian shipbuilding

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., Ramachandran said.

New Delhi wants to invite global shipbuilding giants like Hanwha Ocean Co. Ltd and Samsung Heavy Industries of South Korea and Mitsubishi Shipbuilding Co. Ltd and Mitsui Engineering and Shipbuilding of Japan to India. “All these companies are potential candidates to build shipbuilding and repair infrastructure in the country,” the secretary said.

The Union government is finalising a shipbuilding mission to expand India’s shipping infrastructure and establish an ecosystem that includes policy prescriptions and incentives to promote ship manufacturing in the country.

As part of the Ministry of Shipping’s Amrit Kaal Vision 2047 action plan, 17 initiatives have been identified for shipbuilding, ship repair and ship recycling facilities in India.

Initiatives for shipbuilding and repair include extending the shipbuilding policy by five to ten years beyond 2025-26 and promoting provisions of Atmanirbhar Bharat, or self-reliant India. These include allowing only Indian-flagged vessels to serve government needs, categorizing shipyards based on their technical capabilities and simplifying customs procedures for importing ship parts.

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In addition to shipbuilding and repair, the government has identified initiatives for ship recycling, including expansion of the Alang Shipyard, leveraging the vehicle scrapping policy and developing new ship recycling locations in Andhra Pradesh, Odisha and West Bengal to cater to global markets.

According to the Amrit Kaal Vision 2047, India needs a robust shipbuilding ecosystem with adequate infrastructure and policy enablers for the country to become a leader in the shipbuilding, repair and recycling industry.

Policy measures taken by other key nations in the shipbuilding sector suggest a combination of fiscal and non-fiscal incentives to encourage the development and growth of the Indian shipbuilding industry.

Going down the stairs

The global shipbuilding market is estimated to be worth around $70 billion, dominated by China, South Korea and Japan, according to the Indian Ministry of Shipping’s Maritime Vision 2030 document. The global ship repair market is estimated to be worth around $12 billion.

By the early 2000s, India’s shipbuilding industry was producing vessels with a capacity of over 300,000 gross tons and was among the top 10 in the world. However, the global crisis significantly affected Indian shipyards, and India’s share of the global market dropped to less than 1%. (Gross tonnage is a measure of a ship’s internal volume; 300,000 gross tons would mean a ship with a total internal volume of 300,000 cubic feet.)

India currently has 28 shipyards, six of which are run by central public sector entities, two by state governments and 20 by private companies.

India is one of the market leaders in ship recycling, with a share of around 25% of the global market. However, increasing competition from countries such as Bangladesh and Pakistan is due to higher yields and limited regulatory compliance.

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Shipyards in China, Singapore, Bahrain, Dubai and West Asia account for a significant share of the global ship repair market, largely due to their skilled workforce and latest technology, which enables their yards to attract demand from other low-cost locations such as Malaysia, Indonesia and India.