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Promoting Domestic Ship – Building Industry
Context:
Japan and South Korea have shown interest in investing in India’s nascent shipbuilding industry, according to Union Minister Sarbananda Sonowal. The collaboration could take the form of direct investments, joint ventures, technology sharing, or other partnerships, potentially boosting the sector.
About India’s building and ship Recycling and ship Repair industry :
- India ranks 22th in global shipbuilding, holding just 0.06% of the market, while China, South Korea, and Japan dominate with 85%.
- The ministry’s aim is to lift India from its 22nd position in global ship building to the top 10 of ship building hubs by 2030 and top 5 by 2047.
- Domestic shipbuilding will help achieve the government’s target of controlling at least 5% of global tonnage. Presently we have less than 1% of global tonnage.
- In the early 2000s, India ranked among the top 10 in shipbuilding, producing vessels over 300,000 gross tonnage. However, a global downturn reduced its market share to under 1%.
- Market Outlook: The global shipbuilding market is valued at $70 billion, with ship repair worth $12 billion. India seeks to reclaim its position among leading shipbuilders and capitalise on its 25% share in global ship recycling.
- India is among the market leaders in ship recycling, with about a 25% share of the global market.
- India currently has 28 shipyards, six of which are run by central public sector entities, two by state governments, and 20 by private companies.
Government steps to boost:
Government Support:
- The central government will provide capital support through a ₹30,000 crore Maritime Development Fund, with 49% from the Centre and the rest from port authorities and private investors.
- As part of the shipping ministry’s Amrit Kaal Vision 2047 action plan, it has identified 17 initiatives for shipbuilding and repair and ship recycling facilities in India.
- Cluster-based approach: The Ministry of Ports, Shipping, and Waterways plans to develop 2-3 shipbuilding clusters within 10 years, with 1-2 more clusters expected in the following five years.
- In addition to shipbuilding and repair, the government has identified initiatives for ship recycling, including expanding the Alang Ship yard, leveraging the vehicle scrapping policy, and developing new ship recycling locations in Andhra Pradesh, Odisha, and West Bengal to cater to global markets.
- Land & Infrastructure Needs: The industry needs large waterfront land parcels and sufficient channel depth for shipbuilding, launching, and testing activities.
- Land Utilisation: Focus on repurposing underutilised land to support shipbuilding activities.
- Coastal State Policies: Coastal states will develop incentive schemes, including land aggregation, fast-track clearances, subsidies, tax breaks, and fiscal benefits.
- Three coastal states have expressed interest in providing land for shipbuilding clusters, with companies like Hanwha, Samsung, Mitsubishi, and Mitsui targeted for collaboration.
- Common Maritime Assets: The ministry is developing shared assets like dry docks, testing ranges, and R&D centres to reduce individual capital expenditure and promote industry growth.
- Global Investment Targets: New Delhi is actively inviting global shipbuilding giants such as Hanwha, Samsung, Mitsubishi, and Mitsui to invest in India’s shipbuilding and repair infrastructure. These companies are key candidates for establishing shipbuilding and repair operations in the country.
Challenges & Competition:
- India faces stiff competition from Bangladesh and Pakistan in ship recycling and from China, Singapore, and Dubai in ship repair.
- Shipyards in China, Singapore, Bahrain, Dubai, and West Asia dominate the global ship-repair market, benefiting from their skilled workforce and advanced technology.
- These shipyards attract demand from lower-cost regions like Malaysia, Indonesia, and India, making it challenging for India to capture a larger share of the market.