Quiet race to build ships, end China monopoly

BArely years after this twelvemonth’s unification budget proclaimed a ₹10,000-crore contrive to build shipping containers, Union ministers Sarbananda Sonowal and Ashwini Vaishnaw oversaw the signing of a pact between five national companies and ports to manufacture one million twenty-foot equivalent units (TEUs) in the next 10 years.With such investments, a quiet race is unfolding along 12 major ports and new ones under construction along India’s 7500-km coastline to end China’s near monopoly in building commercial ships and containers, the bedrock of modern seaborne cargo lines.The ambition is make the country one among the top five ship-building nations, with gross registered tonnage (GRT) of four million tonnes annually by 2047, the deadline the country has set to become a developed economy. The country also plans to add 1000 India-made flag carriers by 2036.Also Read:India, Canada ties have ‘energised’, says PM Modi as Mark Carney marks first visitOver 95% of India’s external trade by volume is seaborne, underscoring the importance of ports and ships. The push, with total investments of nearly ₹4 lakh crore, is part of the government’s efforts to expand maritime infrastructure, secure sea trade and cut reliance on foreign-made vessels in a sector currently dominated by China.Alongside, state oil companies are working with the Shipping Corporation of India on a plan to purchase locally made crude tankers to replace India’s aging foreign-chartered fleet. The long-term goal is to have 112 vessels by 2047 at a total estimated cost of ₹85,000 crore, an official of the shipping ministry said.“India’s shipbuilding sector creates strong economic impact; each investment boosts jobs 6.4 times and returns 1.8 times the capital, showing its power to drive growth and development,” a shipping ministry note on the country’s Sagarmala (maritime) initiative states.In September last year, the Union Cabinet cleared the single biggest investment plan, worth ₹69,726 crore, to boost long-term financing, promote greenfield and brownfield shipyard development and shore up technical capabilities. It included an extension of the shipbuilding financial assistance scheme worth ₹24,736 crore till March 2036.“We have made remarkable progress in the growth of maritime sector towards realisation of the goal of Viksit Bharat as per the vision of Prime Minister Narendra Modi. India is poised to be among the top five shipbuilding countries in the world by 2047,” Union shipping and ports minister Sarbananda Sonowal said.Yet, India currently makes less than 1% of commercial ships globally and manufacturing costs are higher than global averages in a sector replete with financing challenges. To ease access to finance, policies now offer 15% assistance for vessels valued below ₹100 crore and 20% funding for vessels valued above ₹100 crore. Separately, qualifying shipbuilders will get access to a ₹5000-crore interest incentivisation fund.Experts however say the country’s maritime ambitions will require more than just viability gap fundings and capital subsidies. It will need to lower domestic manufacturing costs, especially of raw materials like specialised steel, boost private investments and build a world-class certification ecosystem if it has to capture global markets and take on China, said Dharma Rajan of e-Port Logistics.Officials say the government is aiming to build a robust ecosystem, not just give subsidies and a strategy of frontloading public investment to attract the private sector is gradually paying off.In December last year, South Korean shipping major HD Hyundai clinched a deal with Tamil Nadu to build a new shipyard in Thoothukudi (Tuticorin), choosing the state over Gujarat and Andhra Pradesh. Earlier that year in Feb, an affiliate of the South Korean company delivered a 600-ton Goliath crane to Cochin Shipyard, India’s largest state-owned shipbuilder, boosting its cargo-handling capacity.Officials also point to an overhaul of India’s maritime legal framework, with the passage of record five new laws last year to make ports efficient, which can take their share to GDP to over 18%, according to the state-run think-tank Niti Aayog.