Mumbai: Global makers of ship parts and materials plan to set up factories in India to tap rising demand for their products as the country ramps up its shipbuilding capabilities to cash in on the global boom in the business.
Japan’s Mitsui & Co. Ltd and Chugoku Marine Paints Ltd, South Korea’s STACO Co. Ltd, Norway’s Jotun Group and Finland-based engine maker Wartsila Corp. are keen on setting up units in India, said V. Kumar, secretary, Shipyards Association of India, an industry body, and managing director of Bharati Shipyard Ltd.
Boom time: L&T’s shipyard at Hajira in Gujarat. Indian ship makers, including ABG Shipyard and L&T, plan to invest about Rs18,500 cr over the next five years to set up more facilities to meet rising demand.
These component manufacturing firms are planning to set up their units in partnership with Indian firms.
“They are in talks with Shipyards Association members for setting up their units,” Kumar said.
Mitsui is looking at setting up a valve-making unit while Jotun and Chugoku are eyeing marine paint-making factories in India. Chugoku and Jotun are counted among the top global paint makers for the shipbuilding industry. STACO is a top supplier of marine accommodation systems and customized solutions for commercial and passenger ships as well as offshore structures. It makes fire-rated walls, ceiling systems, doors, pre-fabricated cabin, shower units and furniture used in ships.
“There is a huge demand in India for equipment, parts and materials that go into building ships,” said C.K. Thomas, a general manager at the state-run Cochin Shipyard Ltd.
Currently, in the absence of locally available engines, parts, materials and other gears, Indian shipbuilders import the same from factories in Finland, Norway, Germany, Italy, the UK and other countries. But amid a global boom in shipbuilding, dependence on overseas factories creates additional bottlenecks for Indian shipbuilders, both in terms of cost and time.
“We will gain from faster delivery and better prices if these global firms set up shops in India,” Thomas said.
Apart from meeting the needs of the Indian market, they would also be able to supply their products to overseas customers from here, he added.
“Growth in shipbuilding drives growth in a large number of other supporting manufacturing sectors such as steel, heavy engineering, engine manufacturing, paints, etc. and mirrors the same economic multiplier effect witnessed in case of other infrastructure sectors,” said a recent study undertaken by consulting and audit firm KPMG on Assessing economic benefits and benchmarking government support in major shipbuilding nations. The KPMG study was sponsored by the Shipyards Association.
With capacities in traditional shipbuilding countries such as Japan, South Korea and Norway booked for the next few years, fleet owners have started looking at new destinations such as India, Vietnam, Taiwan, the Philippines and Brazil. The global boom in building ships has helped Indian yards to raise their collective order book to about Rs18,000 crore.
To expand their capability to build more ships, local builders such as ABG Shipyard Ltd, Bharati Shipyard Ltd, Larsen & Toubro Ltd, Pipavav Shipyard Ltd, Good Earth Maritime Ltd and the Adani Grouphave plans to invest close to Rs18,500 crore over the next five years to set up more facilities to meet this demand.