India to spend $10bn on 112 tankers to boost domestic shipping capacity

The Indian government is plotting a huge new tanker-building programme to secure its energy supplies.

Bloomberg cited sources familiar with the matter as saying a budget of INR 850bn ($10bn) has been earmarked to order 112 vessels up to 2040.

India is the world’s third-biggest importer of crude, but does not control a significant tanker fleet.

The first phase of contracting is said to involve 79 ships, of which 30 would be MR product carriers, sources said.

A deal for 10 ships could come as early as this month, they claimed.

Only domestic shipbuilders will be considered, although foreign partnerships will be allowed.

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India’s crude oil refining capacity is set to grow to 450m tonnes by 2030, from about 250m tonnes.

India wants to raise the share of domestically built tankers in its fleet to 7% by the same date, from 5% now. The ultimate target is 69% by 2047.

The government has not commented on the report.

Earlier this year, the state announced an INR 250bn fund to support the country’s maritime sector.

But current Indian shipbuilding capacity lacks scale.

The largest ship built in India is a 93,000-dwt panamax tanker.

The government is now inviting shipbuilders from Japan and South Korea to team up on building vessels in India.

South Korea’s HD Hyundai Heavy Industries is said to be in talks with state-owned Cochin Shipyard.

Samsung Heavy Industries has also held talks with giant Japanese shipowner NYK.

Last year, India unveiled an ambitious plan to launch a new state-owned shipping company, boosting the fleet by more than 1,000 cargo vessels over a decade.

The idea is to compete in the growing global trade market and reduce reliance on overseas tonnage.

The new company will collaborate with state-run oil, gas and fertiliser industries to secure business and leverage expertise from existing owners such as Shipping Corp of India (SCI), Reuters reported.

Freight costs to rise

The government hopes to cut freight costs by one-third by 2047, with estimates suggesting a potential rise to $400bn if India relies solely on foreign carriers, Greek shipbroker Xclusiv said last year.

Indian interests currently control a fleet of about 1,500 large cargo vessels, including tankers, gas carriers, bulkers and container ships.

SCI will be asked to provide guidance on “tanker acquisition and ownership, operations and other areas of shipping”, a source told Reuters.

The two ministries are said to have formed a working group to draw up a road map for the scheme.

The new shipowner will be based at GIFT International Financial Services Centre in Gujarat.

The government will encourage state-run companies to sign 15-year charters for newbuildings, so that shipowners can secure cheaper financing.

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