Hoisting the Indian flag on the high seas: Maritime ambitions gather pace

$8 billion spent on foreign tankers could build a homegrown fleet to navigate India's energy, trade, and maritime ambitions through turbulent waters

There are two ways to examine the plan to set up India’s own oil and gas shipping fleet: From the perspective of government-run oil companies and from that of India’s fleet managers, according to the Ministry of Ports, Shipping and Waterways (MoPSW). 

Since the first supply shock that hit India after the pandemic, the Centre has been searching for a credible answer to the lack of maritime heft. The shortage of containers was a clear problem then, as China dominated production (over 95 per cent of the global stock), but there was also a shortage of ships to move them across oceans. The blow to the economy was hard. 

This time, amid the Iran-US war, it is not containers but ships — oil and gas carriers — that are in short supply, echoing the earlier crisis. India has about 492 ships capable of overseas trade, with a total gross tonnage of 11.86 million. That is undersized compared with Greece (32 million) or even Iran (over 12 million). China and Singapore operate on a different scale altogether. It is this gap that India now wants to bridge, in fast-forward mode, by building its own oil and gas shipping fleet. Talks have been underway for some time between state-owned oil companies and the Shipping Corporation of India (SCI) to form a joint venture (JV) to buy secondhand oil tankers and charter additional vessels. 

At India Maritime Week in October 2025, Ports, Shipping and Waterways Minister Sarbananda Sonowal and Petroleum and Natural Gas Minister Hardeep Puri acknowledged the plan. 

Speaking at the event, Puri said the move made sense, saying that India spends about $8 billion over five years on chartering foreign ships — an amount sufficient to acquire a new fleet of crude oil tankers. The proposed equity structure for the JV includes a 50 per cent stake for SCI, 10 per cent for the Maritime Development Fund, and the remaining 40 per cent split among state-run oil companies. Differences, however, have persisted between ministries. As seen in recent disruptions, oil-marketing companies are primarily concerned with the timely delivery of consignments, not the flag of the ship. Even upstream oil company Oil and Natural Gas Corporation (ONGC) has yet to sign on. Despite repeated black swan events over the past five years, these differences remain unresolved. 

This has affected the scale of ambition. At one stage, the plan was to acquire 437 vessels, adding 19 million gross tonnage and nearly doubling India’s shipping capacity. Oil companies have since pared down their requirements. Of the total projected fleet, about 115 ships were earmarked for them; internal estimates now put the number closer to 60. “The JV may look at buying secondhand ships or chartering vessels as an interim solution until new ships are delivered from Indian shipyards, which may take four to five years. The recent acquisition of two such secondhand very large crude carriers by SCI is a case in point,” said R Lakshmanan, IAS, until recently joint secretary in MoPSW. 

“The idea is ultimately to build vessels in Indian shipyards. But evolving geopolitical conditions require immediate alternatives. The series of events — from Covid-19 to the Russia–Ukraine conflict, the Red Sea crisis, and now the US–Israel–Iran war — calls for a long-term strategy. These developments have wide-ranging effects on the economy, threatening energy security, food security, and export-import trade,” he added. 

The proposed investment for the venture is about ₹2.2 trillion over the next decade. Lakshmanan said the annual corpus would be sufficient to secure down payments for ships in the near term. 

SCI has also held discussions with independent shipowners, many of whom are open to chartering their fleet to India. Such owners typically lease vessels year-round to any company with cargo to sail. A government-backed entity is seen as a reliable client that honours contracts, making it an attractive proposition. 

For oil companies, however, the model is unfamiliar. State-run firms are not used to buying and selling assets at short notice. There are also questions about whether SCI, a smaller player compared with oil majors, has the administrative capacity to manage such a large venture. In 2024, SCI set up a subsidiary, SCI Bharat IFSC, at Gujarat International Finance Tec-City to lease ships. The proposed JV would add to its responsibilities. The project is ambitious, particularly as MoPSW itself is a relatively new ministry, with Cabinet-level status only since 2019. 

Yet repeated shipping shortages have pushed MoPSW to act. Building oil tankers and gas carriers will take at least five years. Lakshmanan observed, “India has only a 1.7 per cent share of global shipping capacity. This exposes the country to major risk, as recent events have demonstrated. We also pay about $75 billion annually to global shipping lines for services.” 

At the same time, the ministry is working to establish an Indian Protection and Indemnity (P&I) Club. Such clubs bring together shipowners, operators, and charterers in a mutual, non-profit arrangement to provide financial cover for maritime risks. Most Western European countries have such institutions, which, in turn, purchase reinsurance, diversifying risk. A strong domestic fleet would need a similar P&I Club to bankroll the voyages of these ships. 

There have been hurdles. The Insurance Act does not currently allow mutual insurance associations to operate in this space. Amendments passed in 2025 did not address this gap, meaning the Department of Financial Services in the Ministry of Finance will need to revisit the issue. In the early years, the initiative would also require a sovereign backstop. 

India has historically lacked such a club due to limited shipping volumes and a decline in the ranks of independent shipowners.

These efforts build on a series of measures taken by MoPSW in recent years. A 2024 third-party assessment of the shipbuilding sector highlighted its high employment multiplier — over 6.4 — and strong potential for direct and indirect job creation. It pointed to constraints on shipbuilding growth, such as hamstrung domestic demand, high financing costs, and gaps in capacity and technology. 

As Lakshmanan put it, “The world is becoming more unstable and less predictable. The stability we once saw is unlikely to return. To handle future crises, it is essential to have ships under the Indian flag that can respond to the government’s call.”