India seeks South Korean, Japanese investments to boost shipbuilding sector
What's the story
India is actively seeking investments and technology transfer from South Korea and Japan, with the aim of establishing shipbuilding and ship repair clusters.
This initiative is part of a broader strategy to enhance the domestic shipping supply chain.
The country's current share in the global shipbuilding market is less than 1%, a sector predominantly led by China, South Korea, and Japan.
Aspiration
India's ambitious goal for shipbuilding
The Ministry of Ports, Shipping and Waterways (MoPSW) has set an ambitious goal for India to rise from its current 22nd position, and break into the top 10 shipbuilding nations by 2030.
The long-term vision is to further ascend into the top five by 2047.
This aspiration was shared by TK Ramachandran, Secretary in MoPSW, during his visit to Goa for the 20th Maritime State Development Council (MSDC).
Collaboration
India's invitation to global shipbuilding giants
India is extending invitations to global shipbuilding powerhouses such as South Korea's Hanwha Ocean Co. Ltd and Samsung Heavy Industries, as well as Japan's Mitsubishi Shipbuilding Co. Ltd and Mitsui Engineering and Shipbuilding.
"We are looking at South Korea and Japan for investments and technology transfer for establishing shipbuilding and ship repair clusters in India," Ramachandran stated.
Development
Plans for mega shipbuilding park in India
During the MSDC meeting, plans for a mega shipbuilding park spanning multiple states were discussed.
Ramachandran emphasized that India has communicated to South Korea and Japan about its readiness to provide land for setting up shipbuilding and repair clusters.
Union Minister of Ports, Shipping and Waterways Sarbananda Sonowal has also urged all state chief ministers to allocate land promptly, if Japanese or Korean firms show interest in establishing these clusters.
Response
States express interest in shipbuilding clusters
Ramachandran revealed that three states have shown interest in providing land for these shipbuilding and repair clusters. However, he did not disclose the names of these states.
This initiative is part of a larger plan to consolidate shipbuilding capabilities across regions, promoting greater efficiency and innovation.
Funding
India's Maritime Development Fund and foreign trade
India is planning a ₹25,000 crore Maritime Development Fund (MDF) to provide long-term, low-cost financial support for indigenous ship-building.
The fund will primarily be equity funding sourced from the Centre, PSUs, pension funds, and the private sector.
Currently, 95% of India's foreign trade is conducted through foreign-owned and flagged vessels, resulting in an annual outflow of $110 billion from India.
Industry overview
Challenges and opportunities in India's shipping industry
Ramachandran highlighted that nearly 60% of India's ship repair work is done overseas due to a lack of a financing ecosystem for the shipping industry in India.
As of December 2023, India's fleet comprised 1,526 vessels with a gross tonnage (GT) of 14 million. However, about 44% of these vessels are over two decades old, indicating an impending need for replacement.