Minister of Ports, Shipping and Waterways Sarbananda Sonowal
According to Sarbananda Sonowal, Minister of Ports, Shipping and Waterways, this could be a boost for India’s emerging shipbuilding industry. Companies from Japan and South Korea have shown interest in investing in the sector.
“This could involve direct investment, joint ventures, technology sharing or other forms of collaboration. Such international interest is a testament to the attractiveness of India’s shipbuilding initiative and the potential benefits of global expertise and capital infusion into the sector,” Sonowal told Business Standard in an interview after the recently concluded meeting of the Maritime State Development Council (MSDC).
On Friday, the ministry announced plans to set up multiple shipbuilding clusters in collaboration with coastal states to achieve its ambitious targets. Currently, India ranks 20th in global shipbuilding, with a mere 0.06 percent market share. In contrast, China, South Korea and Japan dominate the industry, with a global market share of 85 percent, according to a recent presentation by the shipping ministry.
“The ministry has a clear vision for the phased development of shipbuilding clusters, with the expectation that 2-3 clusters will be developed and operational within the next 10 years, followed by another 1-2 clusters within the next five years,” Sonowal said.
“This phased approach allows for careful planning, resource allocation and addressing any challenges that arise during the initial stages of development,” said Sarbananda Sonowal.
According to Sonowal, new entrants in a “strategic move to diversify business interests” have also indicated their intention to enter this sector to the government.
According to recent reports, India’s largest port operator, Adani Ports and Special Economic Zone, is looking to branch out into shipbuilding.
The minister also said that the government injection into shipbuilding has prompted state and private shipbuilders to invest further. “They want to expand their activities, which may mean increasing their shipbuilding capacity, improving technological capabilities or diversifying their product offering,” he said.
To support this expansion, the ministry has sought assistance from states at the MSDC in Goa. The bulk of the capital support from the central government will come primarily from a ~30,000 crore Maritime Development Fund, of which 49 per cent will be funded by the Centre and the rest through port authorities and private investors.
The shipbuilding industry has informed the government that the key logistical requirement for establishing successful shipbuilding clusters is access to large areas of land with sufficient waterfront and adequate canal depth.
“The availability of waterfront is crucial for shipbuilding activities as it enables the construction, launching and testing of ships, while sufficient channel depth is required to accommodate the movement of large ships in and out of the shipyards. Meeting these requirements is fundamental to the operational success and competitiveness of the shipbuilding clusters,” Sonowal said.
In response to the needs of the industry, coastal states would soon formulate policies and develop incentive schemes. “These could include facilitating land aggregation, ensuring availability of adequate waterfront, expeditious approvals and clearances to reduce bureaucratic delays, subsidies, tax breaks or other fiscal benefits,” the minister said.
The ministry is also addressing investment gaps by developing common maritime assets, such as dry docks, test ranges and R&D centres, that can be shared across the industry. This will reduce capital expenditure for individual companies and promote overall industry growth.
Sonowal said the focus was on identifying and repurposing existing land that may be underutilized or not being used optimally. “These lands may be under the jurisdiction of maritime boards of state, be on port lands or be in industrial corridors,” he said.
The ministry aims to bridge the gap on its own for investments in common maritime assets that can be used by the entire sector.
“These assets may include shared facilities such as dry docks, test tracks and research and development centres. By providing access to these shared assets, the government aims to reduce the capital expenditure that individual companies have to incur and thereby facilitate the growth of the entire industry,” Sonowal said.
According to the ministry, the share of cargo carried by Indian-owned or flagged vessels has fallen to just 5.4 percent in the past decade. Without action, this share could fall further, potentially diminishing the role of Indian-built vessels even in the domestic market.
In the past, government schemes such as the shipbuilders’ financial assistance policy, the right of first refusal policy, shipyard infrastructure status, etc. have not delivered the desired results.
First publication: Sep 16, 2024 | 12:25 AM IST
