India’s maritime sector serves as the backbone of its trade and commerce, handling around 95 per cent of trade by volume and 70 per cent by value. With a fleet of about 1,500 large vessels, including tankers, gas carriers, container ships and dry bulk carriers, the country currently accounts for less than 1 per cent of the global shipbuilding market, which is dominated by China, South Korea and Japan. India’s 95 per cent foreign trade happens through foreign-owned and foreign-flagged vessels, which cost about $110 billion annually. Over the years, the ship repair industry has suffered due to issues such as the rising cost of financing, longer turnaround time for ship repairs, a shortage of ship spare parts and inadequate ancillary support. As a result, about 60 per cent of the country’s ship repair work is completed abroad.
Upcoming projects
The ship building and repair industry in India has been gaining momentum, with continuous improvements in global maritime traffic. This has also increased the need for maintenance of ageing fleets. To cater to industry needs, the Ministry of Ports, Shipping and Waterways (MoPSW) announced a mega shipbuilding project at Deendayal port in January 2025. The project objective is to develop the capacity to manufacture very large crude carriers (VLCCs) and similar vessels with up to 320,000 tonnes deadweight tonnage (DWT). To come up on an area of 8,000 acres, the project will have a capacity to manufacture 32 ships and repair 50 old ships annually. It will also have a marina, a fishing harbour, townships and a marine industrial cluster, which will create significant trade and employment opportunities. The estimated cost of the project is Rs 300 billion.
Another momentous project is the International Ship Repair Facility (ISRF), which is India’s first fully developed ship repair ecosystem. It is expected to increase the capacity of the ship repair industry by about 25 per cent. It has been built at an investment of Rs 9.7 billion. Spread across 42 acres of leased premises of Cochin Port Authority at Willingdon Island, Kochi, the ISRF will modernise and expand the existing ship repair capabilities of Cochin Shipyard Limited (CSL) and transform it into a global ship repair hub. The commercial operations at the facility started on August 12, 2024 with the successful docking of the vessel named HSC Parali of the Union Territory of Lakshadweep.
Meanwhile, CSL is collaborating with the Deendayal Port Authority (DPA) to build a cutting-edge ship repair facility in Vadinar, Gujarat. To be set up at an estimated investment of Rs 16 billion, the facility will be capable of dry docking capesize vessels. Vadinar, with a natural deep draft of about 15-18 metres, is ideal for repairing capesize vessels, the largest dry bulk carriers. CSL has also signed a master shipyard repair agreement (MSRA) with the US Navy, which qualifies the yard to repair vessels under the US Navy’s Military Sealift Command. As envisaged in the Defence Industrial Roadmap, both countries have agreed to work together for the creation of logistics, repair and maintenance infrastructure for aircraft and vessels in India. Earlier, Larsen & Toubro (L&T) Kattupalli and Mazagon Dock Shipbuilders signed a similar vessel repair agreement with the US Navy. Moreover, Hindustan Aeronautics Limited has entered into a contract with CSL, Kochi, for the supply of six sets of LM2500 gas turbines (GTs) and GT auxiliaries (GTAE), spares and tools for the Indian Navy’s next-generation missile vessel (NGMV) project. The Rs 11.73 billion domestic contract will be executed between financial years 2026 and 2029. Recently, L&T launched second multi-purpose vessel (MPV) for the Indian Navy from its Kattupalli Shipyard near Chennai. The first MPV, INS Samarthak, was launched three months prior to the introduction of INS Utkarsh, which follows an expedited production schedule. Before being delivered to the Indian Navy, the first vessel was being prepared for testing and trials.
Expanding fleet size
India is planning to set up a new shipping company to expand its fleet by at least 1,000 ships in the next decade. The company will be jointly owned by state-run companies in the oil, gas and fertiliser industries, along with Shipping Corporation of India and foreign companies. As per reports, the target is to reduce freight outgoings to foreign firms by at least a third by 2047.
Some of the key players in the shipping industry have also made investment plans to upgrade or add new vessels in their fleet. This is being done to enhance their operational efficiency and strengthen the country’s position in the global shipping market. In a recent development, Goa Shipyard Limited (GSL) concurrently launched two indigenously designed and constructed fast patrol vessels (FPVs) for the Indian Coast Guard. Earlier, the company launched two vessels of the same series in October 2024 as it was constructing a fleet of eight FPVs for the Indian Coast Guard. Further, Great Eastern Shipping has announced a significant investment of $160 million, which is aimed at renewing its fleet. The investment will fund acquisition of new vessels, including advanced tankers and bulk carriers, which are expected to replace older ships in the fleet. These vessels will be equipped with state-of-the-art technology and modern amenities, ensuring optimal performance and safety. Moreover, the Alphard Maritime Group is planning to set up a $500 million shipping fund in the Gujarat International Finance Tec-City (GIFT City). Of this, the company will contribute about Rs 5 billion while its associates will bring in about Rs 45 billion. This fund will support Indian fleet owners to buy assets in the range of $10 million-$20 million. The company is also interested in building some ships in India.
Growth potential
With the presence of a strong workforce, the country has the potential to cater to the labour-intensive ship repair industry. However, India needs to compete with international ship repair yards on major trade routes due to the capability gap of Indian yards in repairing certain types of vessels. To this end, the government is actively supporting the shipping industry through initiatives such as the Aatmanirbhar Bharat Abhiyan, infrastructure development, as well as by providing better opportunities for overall development and enhanced business. The Maritime India Vision 2030 has also identified domestic demand channelisation for shipbuilding and the creation of ship repair clusters.
The MoPSW introduced two significant bills in Lok Sabha, in August 2024. These bills are aimed at aligning Indian regulations with international standards and easing operations. The Carriage of Goods by Sea Bill, 2024, seeks to comply with the international convention and with the changing global scenario in the shipping industry. Additionally, it defines carrier responsibilities, liabilities and rights, emphasising that carriers are not implicitly bound to provide seaworthiness. The Bills of Lading Bill, 2024 seeks to make provisions for the transfer of rights of suit and all liabilities to the consignee named in a bill of lading and every endorsee of a bill of lading, to whom the property in the goods mentioned in the bill of lading shall pass.
The way ahead
According to industry reports, the Indian ship recycling industry is expected to witness a revenue growth of about 15 per cent in financial year 2024-25. The growth will be driven by increased availability of ageing vessels for recycling, as this will reduce the input costs of ship recyclers, the addition of new vessel capacity globally, and increased competitiveness of Indian ship recyclers vis-à-vis global players.
The MoPSW is working on a new shipbuilding scheme to incentivise Indian shipyards till 2035. With this, India will strive to become one of the top 10 shipbuilding nations by 2030 and the top five by 2047. Moreover, the country is seeking investment and technology transfer from South Korea and Japan to establish shipbuilding and ship repair clusters. This is being done to promote the domestic shipping supply chain in the country.
Shipbuilding being a strategic multiplier industry will drive growth in manufacturing sectors on account of strong linkages with multiple industries. Going forward, India’s favourable location with respect to major trade routes/shipping routes will provide opportunities for overall development and enhanced business in the shipping industry.
Sidra Siddiquie
