India Unveils Rs 70,000 Crore Initiative to Boost Domestic Shipbuilding and Decrease Dependence on Foreign Vessels
India is embarking on a transformative journey in shipbuilding, aiming to replicate the success of Maruti Suzuki’s automotive revolution from the 1980s. The government has unveiled an ambitious Rs 70,000-crore ($8 billion) initiative designed to rejuvenate domestic shipyards and enhance the country’s maritime capabilities. This strategic move seeks to significantly reduce India’s dependence on foreign vessels, which currently manage approximately 95% of the nation’s import-export trade.
Government Initiative to Boost Shipbuilding
The newly announced package includes several key components aimed at revitalizing India’s shipbuilding sector. A maritime development fund will be established, alongside a revamped shipbuilding assistance scheme. Additionally, the government plans to offer incentives to attract South Korean and Japanese shipbuilders to set up operations in India, either independently or in collaboration with local shipyards. This initiative is not only intended to draw global investment but also to bolster India’s long-term maritime security and self-sufficiency in shipping.
According to TK Ramachandran, secretary at the Ministry of Ports, Shipping and Waterways, this initiative marks a pivotal moment for Indian shipbuilding, akin to the “Maruti moment” in the automotive industry. He emphasized the necessity of creating substantial domestic demand for ships to ensure the effectiveness of these incentives. Currently, India spends around $75 billion annually on hiring foreign vessels, a figure projected to escalate to $400 billion by 2047 if domestic shipbuilding capacity remains unchanged.
Strategic Importance of Domestic Shipbuilding
The strategic significance of this initiative cannot be overstated. M Angamuthu, Chairperson of the Mumbai Port Authority, highlighted that India’s heavy reliance on foreign vessels poses risks during global disruptions such as pandemics, wars, or sanctions. He asserted that a robust Indian fleet is crucial for maintaining continuity and sovereign control over the nation’s critical supply chains. This initiative aims to address these vulnerabilities by fostering a self-reliant maritime industry.
Currently, India operates only about 1,500 ships, with a mere 220 engaged in overseas trade. The country has fewer than a dozen shipyards capable of constructing ocean-going vessels, contributing to less than 1% of global shipbuilding. In stark contrast, China dominates the market with a 70% share, followed by South Korea and Japan. The government recognizes the urgent need to expand domestic shipbuilding capabilities to enhance India’s maritime presence.
Attracting Global Shipbuilders
To attract international shipbuilders, the Indian government is actively engaging with several prominent Korean and Japanese firms. Many of these companies, including Samsung Heavy Industries, Hyundai Heavy Industries, and Mitsubishi, are currently operating at full capacity and are exploring alternative locations for ship construction. Ramachandran noted that with the new incentive package, India is well-positioned to attract these shipbuilders, who are seeking opportunities to expand their operations.
The government’s proactive approach aims to create a conducive environment for foreign investment in the shipbuilding sector. By fostering partnerships between international shipbuilders and local shipyards, India hopes to enhance its shipbuilding capacity and reduce its reliance on foreign vessels. This initiative not only aims to strengthen the maritime economy but also to secure India’s position in the global shipping industry.
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