Mumbai: BMT Group Ltd, a UK-based maritime consultancy, launched its India operations last week in an attempt to tap into the ship-building boom in the country.
Several Indian companies have been looking to invest in shipyards as demand for ships increases all over the world. BMT’s India team will focus on ship design services. “With the creation and expansion of many shipyards, there will be a huge demand for designing ships,” said David Wignall, head (ports and logistics), BMT Group.
Most Indian shipyards such as the state-run Cochin Shipyard Ltd and Hindustan Shipyard Ltd, as well as private builders such as ABG Shipyard Ltd and Bharati Shipyard Ltd have their own design teams. When a shipowner wants a vessel to be designed according to his specifications, and expertise to do this is not available locally, the yard hires specialists from abroad.
“Indian naval architects are considered good, but unfortunately, India did not have very many ships built here. So, many of them have migrated to Singapore, the UK and the US,” said N.V. Rao, chief operating officer at the Vizag-based National Ship Design and Research Centre, an autonomous society functioning under the ministry of shipping.
With shipbuilding activity picking up in India, he added, ship designing “has a huge market here.”
India’s share in global shipbuilding is expected to rise to around 15% or $22 billion (Rs90,200 crore) by 2020 from the current level of 0.4%, helped mainly by cost competitiveness and ample supply of skilled manpower, according to a report prepared by Mumbai-based consultancy firm i-maritime.
According to the firm, the labour cost per worker in India is estimated at $1,192 a year, compared with $10,743 and $21,317 a year in South Korea and Singapore, respectively. Shipbuilding-grade steel, which used to be imported earlier, is now made by the state-run Steel Authority of India Ltd.
Local builders also get a 30% subsidy from the Union government for building ships both for the domestic market as well as for export orders. The five-year subsidy scheme, which was introduced on 15 August 2002, will end on 14 August 2007. However, the Union government is expected to extend the scheme, which effectively means that the government gives shipbuilders 30% of the value of the orders they receive.
Increasing global economic activity and India’s booming economy have boosted demand for ships. Rising oil exploration and production activities too, have triggered demand for offshore vessels that provide marine logistical support to oil-drilling rigs.
Global shipowners are building more ships at Indian yards as builders in maritime nations such as South Korea, Japan, China and Singapore are refusing to entertain orders for building relatively smaller vessels.
As a result, ABG, Bharti and Tebma Shipyard Ltd, all of whom built only smaller vessels earlier, are now expanding their facilities in Gujarat, Maharashtra and Karnataka. New players such as engineering and construction giant Larsen & Toubro Ltd have also entered the sector.
The Union government also plans to build two mega shipyards, one each on the east and the west coast of the country, with private investment. The Gujarat government has also lined up several shipbuilding and ship-repair projects with private sector’s help.
“When the planned shipbuilding facilities start operation in the next 18 -24 months, somebody has to design the ships. We want to be a little bit ahead of the game by setting up a team here. It makes logical sense,” said Suren Vakil, managing director of BMT’s Indian unit.