India is taking significant measures to expand its shipbuilding capacity aiming to enhance the country’s maritime infrastructure and curb dependency on foreign shipyards. The Modi government intends to make India a key player in the global shipbuilding industry. In this vein, India is likely to collaborate with South Korea to maximise India’s shipbuilding capacity.
A high-level delegation from Hanwha Ocean Co. Ltd. of South Korea, headed by Senior Vice President Jin Su Lee recently met representatives from the state-owned Cochin Shipyard Ltd., Hindustan Shipyard Ltd., L&T Shipbuilding Ltd., and Swan Defence and Heavy Industries Ltd.’s Pipavav Shipyard in Gujarat. Reports say that the officials from the Ministry of Ports, Shipping, and Waterways also met the South Korean delegation.
Notably, South Korea’s shipbuilding industry is dominated by three shipyards— Samsung Heavy Industries, Hanwha Ocean, and HD Hyundai Heavy Industries. In the year 2024, HD Korea Shipbuilding, Hanwha Ocean, and Samsung Heavy Industries each received contracts for 112 vessels worth $12.1 billion, 26 vessels worth $5.7 billion, and 22 vessels worth $4.9 billion.
India’s partnership with South Korea holds special significance since the latter is a direct competitor of China in the global shipbuilding market with China dominating this arena for more than a decade. In the year 2023, China built more than half of all the world’s merchant ships by gross tonnage (33 million GT) implying that the country built 51% of the world’s merchant ships that year. China is reported to dominate 62% of the world’s shipbuilding orders.
In December 2024, a high-level Indian delegation comprising R. Lakshmanan, Joint Secretary of India’s Ministry of Ports, Shipping, and Waterways; Shri Madhu Nair, Chairman and Managing Director of Cochin Shipyard; and Binesh Kumar Tyagi, Chairman and Managing Director of the Shipping Corporation of India (SCI visited South Korea’s top three shipyards HD Hyundai Heavy Industries (HD HHI)’ shipyard in Ulsan. The Indian delegation was given a comprehensive briefing on the advanced technologies employed by South Korean shipyards and their capacity. The Indian delegation’s visit came after Prime Minister Narendra Modi visited South Korea in 2016.
The Indian delegation’s visit came over India’s pressing requisite to acquire 1,000 new commercial vessels, including containerships, liquefied natural gas (LNG) carriers, ultra-large crude carriers (ULCCs), and car carriers.
Investment boost, strategic partnerships and more: Modi government’s plan to navigate India’s way into top-10 rank in global shipbuilding industry by 2030
Notably, the global shipbuilding market was estimated at $207.15 billion in 2023, rising at a 6.5% CAGR to $220.52 billion by 2024. India’s market was valued at $90 million in 2022 and is expected to grow to $8,120 million by 2033, representing a staggering 60% CAGR.
In a bid to give push to India’s shipbuilding capacity and improve repair clusters, the Modi government has proposed a Maritime Development Fund to the tune of Rs 30,000 crore. With this, the Indian government aims to supplement the Rs 1.5 lakh crore upgrade plan which includes the development of 6 deep draft ports, and 2 trans-shipment hubs in addition to green and smart ports.
While India currently ranks 22nd in the global shipbuilding industry, India aims to enter the top 10 global rank by 2030 and become one of the top 5 countries by 2047. This ambition is a part of the Modi government’s broader visions including the Maritime India Vision 2030 and Amrit Kaal Vision 2047, intended to capture a massive share of the global shipbuilding and ship repair markets.
Interestingly, India’s collaboration with South Korea has been on the agenda of the Modi government for long. In fact, in 2017, India and South Korea signed a Memorandum of Understanding (MoU) for naval shipbuilding, involving state-owned shipyards like Hindustan Shipyard Limited. The two governments agreed upon collaborating in the joint production of five Fleet Support Ships worth $1.5 billion US dollars, along with two strategic operating vessels costing approximately $448 million.
In 2019, India and South Korea concluded a logistics pact when Defence Minister Rajnath Singh visited Seoul. As per an official statement issued back then, “The Ministers exchanged views on regional and international developments of mutual interest. Two MoUs to further defence educational exchanges and extend logistical support to each other’s Navies were signed.”
Recently, a delegation of South Korea’s Hanhwa Ocean Co. visited India to discuss a partnership with Indian shipyards and the government. In the words of Hindustan Shipyards Ltd managing director Hemant Khatri, the two countries laid emphasis on “long-term partnerships in advanced design, technology upgrades, smart solutions, electric propulsion and joint shipbuilding ventures.”
India’s collaboration with South Korea can prove to be a game-changer for the country particularly when the former focuses on enhancing skill level and modernising the outdated technology in Indian shipyards. South Korea’s technological advancements in the shipbuilding industry can help India bridge this gap through training, technology transfer as well as shipyard modernisation.
With the global shipbuilding slots booked in countries like China, South Korea and Japan until 2028, the Indian government eyes an opportunity to emerge as a reliable alternative destination for shipbuilding. India’s strategy is not confined to constructing new ships but also expanding into ship repair and recycling given the country already has decent infrastructure.
If the massive demand stemming from the needs of the Indian shipping market is adequately targeted by Indian shipyards, it may result in an opportunity to the extent of over USD 237 billion (INR 20 lakh crores) by 2047.
The Indian government has also launched several schemes such as the Shipbuilding Financial Assistant Policy (SBFAP), and Right of First Refusal (ROFR) policy to improve India’s shipbuilding and ship repair industry, however, more efforts are being made to realise India’s ambitions. Notably, under SBFAP’s first phase, there were 313 vessel orders including domestic and export ops. These were to be procured across 39 shipyards. Of these, 135 vessels have been delivered.
To further boost the shipbuilding industry, subsidies of 25% are proposed for specialised vessels, increasing to 30% for green and highly specialised ones. In order to boost fleet renewal of Indian boats, the government is pushing for a ship-breaking credit note in SBFAP 2.0, among other regulations. When a vessel is demolished in an Indian yard, the shipowner will receive a credit note worth around 40% of the cost, which will be reimbursable against the cost of the construction of a new vessel if it is built at an Indian shipyard.
According to MoPSW data, around 44% of India’s merchant marine fleet is over 20 years old. The government also has plans to establish an apex body to expedite the implementation of SBFAP 2.0.
In November this year, reports emerged that South Korea and Japan have shown interest in investing in Indian shipbuilding yards. India plans to offer joint ventures to these countries or offer a stake in the shipyards and attract foreign investments to the tune of $3-5 billion per shipyard. Odisha and Andhra Pradesh were reported to have been finalised as the two possible States where greenfield shipbuilding yards would be set up, while Maharashtra and Gujarat would be explored for brownfield expansion.
With major schemes like SBFAP and crucial collaborations like the ones with South Korea, focussing on adopting sustainable shipbuilding practices in line with the global trends towards green shipping, India not only intends to enhance its shipbuilding capacity but also its competitiveness in the global market by constructing high-value, technologically advanced and specialised ships.
By improving its shipbuilding capacity, India not only aims to position itself as a key player in the global market but also looks to meet its domestic demands for both commercial and naval vessels and reduce the annual expenditure on leasing ships from abroad. This becomes even more important since India spends around $75 billion annually on leasing ships but controls only 2 per cent of the world’s total tonnage.
India’s ambitious shipbuilding strategy, especially through collaboration with South Korea and Japan, is a multifaceted approach with a clear aim of technological, economic and strategic advancements granting better economic sovereignty and national security by reducing foreign dependence for both commercial and naval vessels.
The success of these measures will depend on the effective execution and sustained foreign investment alongside the intent and ability to upskill its workforce to match up with the global standards as an increased production of ships would lead to the creation of thousands of direct and indirect jobs given the labour-intensive nature of the shipbuilding sector.
If India manages to improve its position in exports in this sector and capture even a small percentage of the market it can secure massive export values giving a major boost to the country’s economy and also contributing to its $5 trillion economy ambition.