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      India鈥檚 shipbuilding ambitions: Where are we now and what to do next?

      To truly build a robust manufacturing base, we need to proactively address these challenges with strategic interventions and collaborative effort.
      event 21 Aug, 2024
      India鈥檚 shipbuilding ambitions: Where are we now and what to do next?

      Smooth seas never made a skilled sailor.

      This is a saying particularly relevant for India as it aims to realise its shipbuilding ambitions. With top shipbuilding nations like China, Japan and South Korea fully booked until 2028, the global shipping industry is searching for new alternatives. This is where India comes into the picture, having a unique opportunity to rise as a top shipbuilding destination.

      While it currently ranks 20th in the world commercial shipbuilding market, India aims to rank among the top 10 shipbuilders by 2030.1聽But what makes this journey so promising, and what are the rough seas we need to navigate? Let鈥檚 dive in.

      A. Setting sail: India鈥檚 advantages:

      • Government reforms

        The Government of India has taken several key measures, such as the Financial Assistance Policy on Shipbuilding, Grant of Infrastructure Status and the Atmanirbhar Policy, to strengthen the sector.聽

      • Supportive ecosystem

        Our demographic edge gives us favourable labour cost advantages. Besides, we also have a developing indigenous manufacturing ecosystem that is capable of supporting heavy manufacturing sectors, such as shipbuilding.

      • Strategic locational presence

        India鈥檚 extensive coastline and strategic geographical position allow access to major shipping routes, giving our shipyards a competitive edge.

      B. Navigating the challenges

      • Financial constraints

        Shipbuilding demands high working capital, roughly 20鈥�25 per cent of the ship鈥檚 construction cost.2聽In India, interest rates for these loans hover around 10鈥�10.5 per cent, significantly higher than the 4鈥�8 per cent rates in major shipbuilding nations.3聽Planning innovative financing solutions can perhaps benefit the sector.

      • Skilled manpower

        Although labour costs in India are 10鈥�20 times lower than in major shipbuilding countries4, productivity remains a concern due to limited skills for modern shipbuilding. Upskilling our workforce is essential, and collaboration between the government and private sector is key.

      • Technological gaps and import dependence

        Limited technological interventions and outdated production methods hinder our global competitiveness. Additionally, reliance on imports for critical components like propellers, high-capacity diesel generators and control systems poses a challenge. Industry-specific PLI schemes could help bridge this gap.

      indis-shipbuilding-ambitions

      Recently, the launch of shipbuilding operations by a private player at India鈥檚 largest port was a significant step forward. Going ahead, to truly build a robust manufacturing base, we need to proactively address these challenges with strategic interventions and collaborative effort.

      [1]聽India鈥檚 Shipbuilding Market to Expand with Adani Group鈥檚 New Facility at Mundra Port, Marine Insight, 9 July 2024, accessed on 6 August 2024
      [2]聽Navigating Economic Security through Shipbuilding, National Maritime Foundation, 18 January 2024, accessed on 6 August 2024
      [3]聽Navigating Economic Security through Shipbuilding, National Maritime Foundation, 18 January 2024, accessed on 6 August 2024
      [4]聽Navigating Economic Security through Shipbuilding, National Maritime Foundation, 18 January 2024, accessed on 6 August 2024

      Author

      Neeraj Bansal
      Neeraj Bansal

      Partner and Head India Global

      乐鱼（Leyu）体育官网 in India