Capt. V.K. Rajakrishnan, Chief Executive Officer, Tristar Container Services
Much has been said recently about container manufacturing and shipbuilding in India, with various reasons being advanced for the government’s sudden interest in industries that have, in reality, been severely neglected for decades.
The old saying attributed to George Santayana comes readily to mind: “Those who cannot learn from history are doomed to repeat it.” India’s renewed ambitions in these sectors would therefore be better served by examining why similar initiatives failed previously, rather than by industrial nostalgia or headline aspiration.
The Indian subcontinent was once home to several container manufacturers – private participants as well as at least one prominent public sector player – many of whom effectively ran themselves into varying degrees of financial distress or bankruptcy between the early 1980s and the late 1990s. The reasons were neither mysterious nor ideological. They were structural: inadequate demand, lack of scale, high material costs, intense international competition, and, fundamentally, insufficient container proliferation in relevant trade flows.
The same broad pattern may also be observed in Indian shipbuilding, where public and private yards alike remained largely dependent on state-supported naval, coast guard, offshore, tug, barge, specialised orders and similar segments, rather than globally competitive commercial shipbuilding.
It is worth noting that India’s own national carrier, despite having commenced operations in the early 1960s, today operates only a minimal container fleet. Yet contemporary discourse periodically suggests aspirations for a large-scale “Bharat Container Line” capable of competing with entrenched global operators.
Such ambitions may be politically attractive, but they warrant rigorous commercial scrutiny. If foreign carriers are accused of extracting excessive freight from Indian cargo interests, it is equally necessary to ask why India’s own historical shipping structures were unable to compete effectively in the same free market environment.
Against this backdrop, proposals for a state-backed “Bharat Container Line”, or parallel state-led container manufacturing ambitions, sit uneasily due to the following reasons:
China’s model works because China’s trade structure supports it
The rationale for container manufacturing in India is materially different from that of export-dominant economies such as China. China’s global leadership in container manufacturing did not emerge by accident, nor solely by state support. It is sustained by structural export surpluses, rapid equipment cycling and continuous demand for containers at origin. A directional look at Far East trade concentration indicates that Greater China alone accounts for approximately 70 per cent of loaded export cargo from the Far East. In a representative month, approximately 6.5 million (twenty-foot equivalent units) TEUs depart Chinese ports as exports, and approximately 3.5 million TEUs arrive as imports. This creates an approximate monthly imbalance of 3 million TEUs, a substantial portion of which must be offset through empty repositioning to sustain export flows.
With a global ocean-going container fleet estimated at over 50 million TEUs, and assuming an average container life of approximately 12 years, replacement demand alone may require roughly 4-4.5 million TEUs annually, or approximately 400,000 TEUs per month, before growth demand is even considered. This structural replacement and growth cycle forms the commercial bedrock of China’s container manufacturing industry, which today produces approximately 95-98 per cent of the world’s containers.
Furthermore, Chinese factories, which have largely free and clear plant and machinery, and in many cases are fully amortised and enjoy significant economies of scale, can compete very aggressively, even on a marginal cost basis against new container factories without scale volumes.
India’s reality is different: Domestic containerisation, not global box dominance
India does not presently generate comparable export-led equipment demand sufficient to justify the large-scale manufacturing of standard international containers for global deployment. Accordingly, India’s principal economic justification for container manufacturing lies elsewhere – domestic containerisation (inland logistics, rail-linked freight, coastal shipping, multimodal transport, domestic supply chain integration, and specialised internal equipment requirements).
India’s freight economy remains overwhelmingly road-based, estimated at over 70 per cent of all freight moved in the country. Additionally, the rail share of about 20-25 per cent in freight tonnage is substantially distorted by bulk commodities such as coal, ore, cement, and fertilisers – cargo categories that are not meaningfully containerisable, leaving export container traffic at less than 5 per cent of the rail share and domestic containers at about 1 per cent of the rail share. Consequently, container proliferation in the domestic freight market still remains minuscule in 2026.
This is where India’s genuine opportunity lies. Each incremental 1 per cent modal shift from road to rail or coastal movement creates disproportionately greater demand for domestic container equipment. If rail and coastal freight economics become globally competitive, domestic container demand could expand materially, thereby creating a rational and scalable basis for indigenous manufacturing.
India’s domestic container opportunity is therefore a logistics – particularly rail reform – story before it is a manufacturing story, and before attempts to replicate the China model are even contemplated.
Policy contradiction: Misuse of international containers in the domestic tariff area
Even this limited but strategically sensible objective is being materially undermined by policy incoherence. The widespread permissibility and weak enforcement surrounding the use of international containers within India’s domestic tariff area suppresses demand for legitimate domestic containers and, by extension, significantly weakens the commercial rationale for domestic manufacturing.
Foreign or internationally deployed containers, often never intended to serve as domestic equipment, are routinely diverted into internal circulation. This depresses demand certainty, distorts the cost-structure and pricing, and inhibits indigenous capital formation.
The “grey container” market: A parallel economy
More concerning still is the scale of the so-called “grey container” market. Industry participants frequently contend that substantial numbers of non-duty-paid international containers are repurposed, cosmetically altered, repainted and deployed as ostensibly domestic containers without proper regulatory compliance, tax treatment or standards oversight.
This shadow market is widely believed by market participants to rival, and potentially exceed, the legitimate domestic container pool. Its consequences are profound – legitimate container manufacturers and lessors face distorted competition, fiscal leakage occurs, traceability is compromised, safety oversight weakens, and domestic manufacturing incentives are materially undermined.
In effect, India risks not merely neglecting a domestic container manufacturing ecosystem, but actively allowing informal market distortions to out-compete it before it can properly emerge.
Standards imperative: International compliance, not ad hoc localisation
A further concern lies in India’s recurring tendency to “adapt” international engineering standards to local conditions. In certain sectors, localisation may be commercially reasonable. In multimodal freight containers, however, such dilution can be dangerous.
ISO containers are not arbitrary steel boxes. They are globally interoperable engineering assets designed around strict standards governing corner post strength, lifting tolerances, stacking loads, dynamic transport stresses, seamless rail-road-marine interoperability and so on.
Given that containers are routinely lifted from corner castings under gross weights often ranging between 30-34 tonnes, deviations from internationally accepted ISO structural standards are not merely inefficient – they may be operationally hazardous.
Non-standard structural modification risks include structural failure, unsafe lifting, insurance disputes, intermodal incompatibility, export credibility damage, and potentially catastrophic incidents impacting the safety of life and property. For a country seeking to expand multimodal logistics capability, standards divergence is therefore not innovation – it is strategic self-harm.
Strategic requirement: Domestic ecosystem + market discipline + ISO compliance
India’s realistic domestic container strategy should therefore rest on three simultaneous pillars:
- Market discipline:
– Curtail misuse of international containers in domestic circulation;
– Address grey-market distortions;
– Create commercial certainty for domestic manufacturers and lessors. - Domestic logistics reform:
– Rationalise the rail tariff structure for unitised cargo by addressing the imbalance between net passenger km
(npkm) and net tonne km (ntkm). The current ratio of approximately 0.40 is materially below
international benchmarks of 2-4, effectively resulting in freight cross-subsidising passenger traffic.
– Encourage road-to-rail and road-to-coastal modal shift;
– Improve domestic container demand;
– Encourage the building of scalable legal domestic equipment pools. - Standards discipline:
– Full adherence to internationally recognised ISO standards;
– No dilution through ad hoc localisation;
– Safety, interoperability and global credibility as non-negotiable principles.
Conclusion
India’s realistic opportunity is not to replicate China’s export-driven container manufacturing dominance, nor to indulge in industrial symbolism unsupported by trade realities. Its genuine opportunity lies in building a credible domestic container ecosystem that supports internal logistics modernisation, enables modal shift, operates within a coherent legal and fiscal framework, eliminates grey-market distortions and conforms rigorously to international ISO standards.
India’s challenge is therefore not whether it can manufacture containers – it can.
The real question is whether India can create the legal, logistical and standards-based ecosystem that makes such manufacturing economically rational.
With absent policy coherence, market discipline and international compliance, India risks remaining at square one – aspiring to build an industry while simultaneously undermining the very conditions necessary for its existence. Industrial ambition unsupported by commercial logic is not strategy – it is merely repetition, and in time, liability.
Capt. V K Rajakrishnan is a Master Mariner by profession and has spent over four decades in the Shipping, Multimodal Logistics & Equipment-leasing industry. He currently heads the Indian JV of one of the world’s largest equipment Lessors.