In an attempt to tap increasing demand for ship engines, India’s largest shipping firm, the state-owned Shipping Corp. of India Ltd (SCI), is joining hands with a few government-run ports to enter the business of manufacturing diesel engines for ships.
“We have asked an alliance of state-owned firms in the shipping and port sectors to set up a ship engine making factory. Modalities in this regard are being finalized,” said A.K. Mohapatra, secretary, Union ministry of shipping.
The alliance, led by SCI, also includes Jawaharlal Nehru Port Trust, Mumbai Port Trust, Kolkata Port Trust and Cochin Shipyard Ltd.
Mohapatra said there is an acute shortage of ship engines at a time when shipyards across the globe are fully booked for the next few years. The order books of global ship engine makers such as MAN Diesel SE, Rolls Royce Plc. and Wartsila Corp. are full. If an engine is ordered today, it will not be delivered untill 2010.
“The idea is to have technological autonomy in shipbuilding and related activities for the country,” Mohapatra said.
The shipping ministry has suggested a few modifications to a preliminary blueprint for this project prepared by audit and consulting firm Ernst and Young, he added. The final report, to be submitted by the consultants in the next few days, will incorporate the suggestions made by the ministry.
ABG Shipyard Ltd, India’s biggest private sector shipbuilder, had earlier said that it would invest close to $100 million (Rs394 crore) to set up a ship engine making plant at Dahej, Gujarat.
With local shipyards adding capacities and new players entering the shipbuilding business, demand for ship engines within the country is set to increase.
In the absence of locally available engines and other gears, Indian shipbuilders import them from factories located in Finland, Norway, Germany, Italy and the UK. But amid a global boom in shipbuilding, dependence on overseas factories creates additional bottlenecks for Indian shipbuilders.
“We have to wait for as many as 24 months to get an engine after it is ordered. This used to take 12 months earlier,” said M. Santhanam, associate vice-president, looking after ABG’s flagship shipbuilding facility at Magdalla Port in Surat, Gujarat. Making engines locally would not only cut delivery times, but also costs.
Major marine equipment makers, including MAN Diesel, Wartsila and Rolls-Royce, are also considering setting up facilities in India in an attempt to cash in on India’s rapidly increasing shipbuilding industry, which is expected to expand, by some recent estimates, at 30% a year.
The Indian shipbuilding industry has grown in recent years on increasing demand for ships globally. Traditional shipbuilding nations such as South Korea and Japan have turned down orders for relatively smaller ships for lack of capacity in their shipbuilding yards.
Indian yards such as ABG, Bharati Shipyard Ltd, Larsen and Toubro Ltd, Cochin Shipyard, Pipavav Shipyard Ltd, Hindustan Shipyard Ltd, Mazagon Dock Ltd and a few others, are currently building ships worth more than Rs20,000 crore.