With a coastline of 7500 KM, it is hard to imagine, that for the first 20 years (1947-1967) India had
no ‘shipping ministry’. In 1967 a Shipping ministry “coupled” with ROAD transport was established.
Since then this ministry has been on a name changing ride, not once, not twice but six times. In 2009
the “ROAD Transport and Highways” was de-coupled and ‘Shipping’ ministry was formed. Turning
point came in 2015 with a clear maritime vision for 2030 and 2047. Ministry was re-christened, aptly
to Ministry of “Ports, Shipping and Waterways” in 2020.
Financial and Strategic importance of Shipbuilding
a. A Shipyard becomes an opportunity hub and like a queen bee requires the support of an
industrial colony to manufacture machinery and equipment.
b. National Shipyards support fleet renewal needs of the Navy.
c. Contributes to national GDP, increases inflow of FOREX.
d. Cargo ships could transport 90% of military machinery and equipment in an overseas war.
Korea shipbuilding is 8% of GDP. Japan’s automobile industry is 2.9% of GDP. India’s shipbuilding a
meagre 0.000578% of GDP. In context, India’s pharmaceutical industry, ranked third largest in the
world is 1.72% of India’s GDP.
Were Shipyards and Government of 20th century in sleep mode?
Prominent shipyards in India were built in the colonial period. Mazagon Dock 1774, Garden reach
1884, Hindustan shipyard 1941 to cater to British navy and merchant fleet needs. Cochin shipyard
1972, Adani Katupalli 2013, Reliance Naval and Engineering, Rajula Gujarat 1997 and others have
limited capacity, hence a lot more work to do. Capt. Subhangshu Dutt (Singapore) a mariner and now
a shipowner, says “GOI should hold hands in any collaboration till the marriage with the foreign
entity is reasonably stable. He also suggests that “new shipbuilding sites should be given to existing
successful shipyards since they have decades of experience and talent. Consortium of 3 or more
parties may also be good idea”.
Potential Shipbuilding Market
The market is estimated to reach around USD 200 billion by 2029, growing at a CAGR of 4.84%. While
India is at bottom with 0.07% of world share, behind Philippines 1.5% and Vietnam 1%, however on
the positive side, India has done well in taking care of its defence needs, with 37 of 39 Naval ships
being built in Indian yards. While US Navy is looking at shipyards in Japan, South Korea and allied
countries in Europe for their fleet renewal needs, due to limited shipbuilding capacity within the US.
Rear Admiral S Shrikhande researching on maritime as a Fellow at Wollongong University, Australia,
says “Shipbuilding in India needs both, serious incentivisation and dogged determination and not
harping on being a big ship breaking country. That Garden Reach shipyard has a $54 million order for
merchant ships from a German owner, is a good sign”. As per SPLASH report the demand for LCO2
carriers could reach 2,500 ships by 2050. As per Det Norske Veritas 2050 report various, vessels fitted
with wind-assisted propulsion ships could lead to fuel savings of 3% to 14%. It is estimated that 40%
of global fleet of ships could have wind propulsion by 2050.
A surge in such vessels is due to an unparallelled wave of decarbonization in the shipping industry.
Demand for ships with ‘carbon neutral’ badges, such as Dual fuel, Wind assisted, Nuclear fuel ships,
Hydrogen powered ships, Liquified CO2 (LCO2) carrier, is outstripping supply. A must in the ‘bucket
list’ of every Shipyard.
Investing in Shipbuilding
Similar to an aircraft, building a ship could take anything from 8 to 12 months. Typically a 2500 Teu
container ship could cost around $40 million while a LNG vessel $250 million upwards. The lifespan of
a container ship could be 20/25 years while that of a LNG vessel could be 30/35 years.
Shipbuilding industry requires large capital investment and return on investment is over medium to
long term. Further Shipbuilding and ship repair facilities are two sides of the same coin. A mid-range
sized 10-year old tanker could spend about $3 million for their routine docking and repair every 2.5
years. US Navy have a reputation of being good pay masters. They have signed repair agreements
with leading Indian shipyards on the east and west coasts. These agreements permit US Naval ships
to access these yards for carrying out maintenance and repairs. Since the scope of a shipyard goes
beyond ‘shipbuilding’ thus, pinning down a standard ROI in shipbuilding is not easy, but experts
suggest it could range from 4% and up to 15% for the high demand ‘carbon neutral’ ships.
Looking for international partners
On China’s shipbuilding success story, Manoj Pandalanghat (Singapore) a mariner and ship owner
believes that “China has around 50 active Shipyards. Each have a few large dry docks. In each dock
two or more large vessels are built simultaneously. Thus, a single yard is able to roll out 2/3
vessels/month, 36 vessels/year and 50 shipyards roll out 1800 vessels/year”.
China could be a jaldi-5, but India needs a sturdy Mount Fiji. Besides technology, Japanese most
importantly bring with them soft-skills and culture such as Kaizen, Poka-yoke (eliminating human
errors) Hoshin Kanri (Strategic approach and planning) and others essential for success from keel
laying to delivery. Maruti is a standing example.
Food for thought for PMO and New Delhi
GOI has established a Maritime Dev Fund of Rs 25,000 Cr to support shipyards. So what more
could New Delhi do?
a. Expertise: Hire Naval Architects and shipbuilding experts with current international experience.
b. Government assistance: Land, Financial support, tax subsidies and timebound clearances.
c. Monitoring: PMO should monitor the first 5 to 10 years till Shipbuilding takes-off on this long
haul flight to destination 2047.
India’s Shipbuilding is expected to grow to $237 billion by year 2047. On a back of the envelope
calculations this works out to about 4% of India’s 2047 projected GDP of $ 5 trillion. While cars are
driven on roads, however the Ministry of roads and transport has little to do with “Automobile
manufacturing”. On a similar note ‘Shipbuilding’ as an industry has little to do with Ports, Shipping
and Waterways, thus it may be worthwhile to consider a separate ‘Ship-building’ wing in the Ministry
of Ports, Shipping and Waterways headed by a dynamic cabinet rank minister. Since 2047 targets are
stiff and an uphill task, so in all probabilities, the officials in Ministry of Ports, Shipping and
Waterways are likely to push beneath the carpet, delays and failures of Shipbuilding with sweet
success stories of “Ports, Shipping and Waterways” and if this does happen then India will not only
miss the Shipbuilding bus of the 21 st century, but a lot more from a national security and strategic
perspective.
