India seeks investments from South Korea & Japan for shipbuilding clusters

India is seeking investments and technology transfer from South Korea and Japan to establish shipbuilding and ship repair clusters to promote the domestic shipping supply chain in the country, according to a senior government official.

Currently, India holds less than 1 per cent of the global shipbuilding market, dominated by China, South Korea, and Japan.

"We are looking at South Korea and Japan for investments and technology transfer for establishing shipbuilding and ship repair clusters in India," TK Ramachandran, Secretary in Ministry of Ports, Shipping and Waterways (MoPSW), told a group of journalists here.

Ramachandran was in Goa to participate in the 20th Maritime State Development Council (MSDC), where plans for a mega shipbuilding park, spanning multiple states, were discussed.

"We have communicated to them (South Korea and Japan) that you come with your technology and investments, we will provide you land for setting up shipbuilding and ship repair clusters," he said.

Ramachandran also said that Union Minister of Ports, Shipping and Waterways Sarbananda Sonowal has written to chief ministers of all states to provide land immediately if Japanese or Korean companies express interest in setting up shipbuilding and ship repair clusters in their states.

"At least three states have expressed interest in providing land for establishing shipbuilding and ship repair clusters," he said, without naming the states.

According to him, this ambitious initiative aims to consolidate shipbuilding capabilities across regions, fostering greater efficiency and innovation.

Ramachandran said India's proposed Rs 25,000 crore Maritime Development Fund (MDF) -- which looks at providing long-term, low-cost financial support and push towards indigenous ship-building -- will be basically equity funding.

"The equity funding will come from the Centre, PSUs, pension funds and private sector," he noted.

While pointing out that currently, 95 per cent of India's foreign trade happens through foreign-owned and foreign-flagged vessels, which results in an outgo of $110 billion annually from India, Ramachandran said almost 60 per cent of the country's ship repair work happens outside the country.

"The financing ecosystem (for the shipping industry) is not there in India. Entire value chain financing, insurance, ownership of ships, leasing, recycling and repairs of ships happens abroad," he said.

India's fleet currently stands at 1,526 vessels with a gross tonnage (GT) of 14 million as of December 2023. However, about 44 per cent of these vessels are over 20 years old, indicating a need for replacement in the coming years.

Currently, India spends close to $75 billion annually on leasing ships from outside. India owns about 2 per cent of the world's total tonnage.