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

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

An Indian delegation has met with authorities and entities in South Korea to access their interest in investing in India towards setting up shipbuilding and repair facilities at its proposed mega shipbuilding parks. A similar exercise is proposed for Japan to access their interest in shipbuilding in India.

“We are looking at Korea for putting up shipbuilding infrastructure in the country. The talks are for both funding as well as technology transfer. Similar exercise is also on with Japan,” said T.K. Ramachandran, secretary in the ministry of ports, shipping and waterways. 

The ministry’s aim is to lift India from its 22nd position in global shipbuilding to be among the top 10 shipbuilding hubs by 2030 and top 5 by 2047, he added.

“Three coastal states have already expressed their willingness to give land for shipbuilding and repair cluster. Now, we will tie up with companies to put up this cluster,” Ramachandran said.

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“Domestic shipbuilding will help achieve the government’s target of controlling at least 5% of global tonnage. Presently we have less than 1% of global tonnage. It is not enough to achieve the targeted economic growth and development of the nation,” said Pushpank Kaushik, chief executive of Jassper Shipping, a Singapore-based shipping and logistic service provider.

“Domestic shipbuilding will not only support Indian ship owners but will also become an alternate shipbuilding destination away from Vietnam, Korea, Japan and China.”

Indian shipbuilding’s Maruti moment

India wants to replicate in the domestic shipbuilding industry the automobile revolution that began with wooing Japanese carmaker Suzuki Motor Corp. in the 1980s to establish Maruti Suzuki India Ltd, Ramachandran said. 

New Delhi wants to invite global shipbuilding giants such as South Korea’s Hanwha Ocean Co. Ltd and Samsung Heavy Industries and Japan’s Mitsubishi Shipbuilding Co. Ltd and Mitsui Engineering and Shipbuilding to India. “All these companies are possible candidates for putting up shipbuilding and repairs infrastructure in the country,” the secretary said.

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

As part of the shipping ministry’s Amrit Kaal Vision 2047 action plan, it has identified 17 initiatives for shipbuilding and repair and ship recycling facilities in India. 

The initiatives for shipbuilding and repair include extending the policy for shipbuilding for 5-10 years beyond 2025-26, and promoting Atmanirbhar Bharat, or self-reliant India, provisions. These include allowing only Indian flag vessels to serve the government’s requirements, grading of shipyards based on technical capacities, and simplification of 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 expanding 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 plan, India needs a strong shipbuilding ecosystem with adequate infrastructure and policy enablers for the country to become a leader in the shipbuilding, repair and recycling industry. 

Policy measures pursued by other key shipbuilding nations suggest a mix of fiscal and non-fiscal incentives for encouraging the development and growth of India’s shipbuilding industry. 

Down the ladder

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

In the early 2000s, India’s shipbuilding industry produced vessels with a capacity of more than 300,000 gross tonnage and ranked among the world’s top 10. However, the global downturn significantly impacted Indian shipyards, and India’s share in the global market declined to under 1%. (Gross tonnage is a measure of a ship’s internal volume; 300,000 gross tonnage 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 among the market leaders in ship recycling, with about a 25% share of the global market. However, rising competition from countries including 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 major share of the global ship-repair market, largely due to their skilled workforce and the latest technology, which allows their shipyards to attract demand from other low-cost locations including Malaysia, Indonesia and India.