India Eyes South Korean and Japanese Expertise for Shipbuilding Expansion

India is aiming to attract investments and technology transfers from South Korea and Japan to establish shipbuilding and ship repair clusters. This initiative seeks to enhance the domestic shipping supply chain. Currently, India holds less than 1% of the global market, dominated by China, South Korea, and Japan.

India is looking to secure investments and technology transfers from South Korea and Japan to develop shipbuilding and ship repair clusters, as announced by a senior government official.

Presently, India controls less than 1% of the global shipbuilding market, which is predominantly led by China, South Korea, and Japan.

'We are seeking South Korean and Japanese investments and technology transfer to establish shipbuilding and ship repair clusters in India,' said TK Ramachandran, the Secretary in the Ministry of Ports, Shipping, and Waterways (MoPSW), to a group of journalists.

Ramachandran attended the 20th Maritime State Development Council (MSDC) in Goa, where plans for a multi-state mega shipbuilding park were discussed.

'We have communicated to them (South Korea and Japan) that if they provide technology and investments, we will provide land for developing shipbuilding and ship repair clusters,' he said.

Union Minister of Ports, Shipping, and Waterways Sarbananda Sonowal has urged state leaders to allocate land promptly should Japanese or Korean companies show interest in setting up shipbuilding and ship repair clusters.

'At least three states have expressed willingness to provide land for these clusters,' Ramachandran disclosed, though he did not specify the states.

According to Ramachandran, this initiative aims to strengthen shipbuilding capabilities nationwide, promoting enhanced efficiency and innovation.

India's proposed Rs 25,000 crore Maritime Development Fund (MDF) seeks to offer long-term, low-cost financial support to indigenous ship-building through equity funding from the Centre, PSUs, pension funds, and the private sector.

Ramachandran highlighted that currently, 95% of India's foreign trade is conducted through foreign-owned and foreign-flagged vessels, leading to an annual expenditure of USD 110 billion. Additionally, nearly 60% of India's ship repair work is outsourced overseas.

'India's shipping financing ecosystem is underdeveloped, with much of the value chain—financing, insurance, ship ownership, leasing, recycling, and repairs—taking place abroad,' he noted.

As of December 2023, India's fleet comprises 1,526 vessels with a gross tonnage (GT) of 14 million. However, 44% of these vessels are over 20 years old, indicating a pressing need for renewal.

India currently spends approximately USD 75 billion annually to lease foreign ships and holds about 2% of the world's total tonnage.

(With inputs from agencies.)