Modi govt unveils plans to become Atmanirbhar in oil shipping: 112 made-in-India oil tankers to be purchased for $10 billion
In a major boost to the ‘Make in India’ initiative, India is likely to invest $10 billion ($850 million) by 2040 to purchase around 112 crude oil tankers to be made in India. Being the third-largest importer of crude oil, India aims to curb its dependence on foreign-owned vessels by building a domestic fleet. With this move, India seeks to bolster its energy security.
Currently, government-owned oil companies lease an ageing fleet from international companies. However, the petroleum and shipping ministries want to discontinue this practice and come up with a fleet of “built-in-India” oil tankers.
In the first phase, India will purchase 79 tankers, of which 30 will be medium-range vessels, Bloomberg reported, citing official sources.
The report says that the purchase order for the first 10 crude oil tankers will be out this month end. For this, only locally built ships or those built in collaboration with foreign companies would be taken into consideration for purchase.
Besides, India is also focusing on enhancing its crude oil refining capacity from 250 to 450 million tonnes annually by 2030, driven by rising local and global demand for oil products. Building an indigenous shipping capacity will help India ensure an uninterrupted energy trade flow, since India is significantly dependent on imported crude.
%India is working towards increasing the share of locally built crude tankers from 5 per cent to 7 per cent by the year 2030 and to 69% by 2047, the year by which India aims to achieve the status of a “developed nation”.
It must be noted that India spends around $75 billion annually on leasing ships but controls only 2 per cent of the world’s total tonnage in shipping.
Modi government’s boost to India’s shipbuilding industry
In a massive boost to India’s shipbuilding industry, the Modi government has accorded the coveted ‘infrastructure’ status for large ships. Finance Minister Nirmala Sitharaman announced in her speech for the budget 2025-26 on 1st February said that the ships above a specified size would be included in the harmonised master list (HML) for infrastructure, making them eligible for financial incentives. This will attract private investment in the shipbuilding industry and enhance fleet modernisation.
The Modi government announced the allocation of a Maritime Development Fund (MDF) with a corpus of Rs 25,000 crore. This fund would be utilised for long-term financing to support the country’s maritime industry, particularly ship acquisition. Up to 49% of the corpus will be contributed by the Central government, while the rest of it will be mobilised from port authorities, other government entities, Central PSEs, Financial Institutions and the private sector.
The global shipbuilding market was estimated at $207.15 billion in 2023, rising at a 6.5% CAGR to $220.52 billion by 2024. India’s market was valued at $90 million in 2022 and is expected to grow to $8,120 million by 2033, representing a staggering 60% CAGR.
The global maritime landscape is dominated by China, Japan and South Korea, with the three of them contributing 50%, 15% and 28% respectively to global shipbuilding. India, however, is collaborating with China’s direct competitor, South Korea, to expand its shipbuilding capacity. South Korea’s HD Hyundai Heavy Industries Co. is negotiating with India’s state-owned Cochin Shipyard Ltd. for a new facility in the coastal city of Kochi.
While India currently ranks 22nd in the global shipbuilding industry, India aims to enter the top 10 global rank by 2030 and become one of the top 5 countries by 2047. This ambition is a part of the Modi government’s broader visions, including the Maritime India Vision 2030 and Amrit Kaal Vision 2047, intended to capture a massive share of the global shipbuilding and ship repair markets.
In May this year, the Maharashtra government approved the Shipbuilding, Ship Repair and Ship Recycling Policy, 2025. The decision comes as a major leap towards enhancing India’s maritime capabilities, an area which was prioritised by the central government in this year’s budget. In ship repair, India ranks 20th globally, while in ship recycling, the country stands in second place with a share of 32.6%. Maharashtra accounts for 11 per cent of India’s shipbuilding capacity and 21 per cent of production. The policy is an effort to make use of India’s untapped potential in the maritime sector.
Atmanirbhar Bharat, stronger Bharat
Besides potential foreign collaboration with key international players, India, by prioritising domestically built ships, aims to bolster its maritime and naval capabilities, curb vulnerability to geopolitical disruptions like blockades or wars. In the longer run, India seeks to strategically decouple from reliance on foreign powers for critical energy transport services. Focus on domestically constructed fleet is vital for securing India’s energy supply chain, especially because India is the third-largest oil importer. With crude oil refining capacity expected to grow from 250 million tons to 450 million tons by 2030, India will be able to fare better in terms of meeting domestic and international demands.
Domestic shipbuilding would not only create thousands of jobs for Indians, boost economic growth through indigenous manufacturing but also enhance India’s strategic autonomy in energy logistics, thus positioning the country better to navigate the volatility that comes along the global energy market as well as sanctions-related challenges as seen in the case of Russian oil shipments.
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