New Delhi: India has unveiled plans to establish a new shipping company with the aim of expanding its fleet by at least 1,000 ships over the next decade, according to reports. This initiative is part of the nation’s strategy to capture a larger share of revenue from the growing trade sector.

Under the leadership of Prime Minister Narendra Modi, who recently secured a third term, India is making significant hashtag#investments in infrastructure with the goal of becoming a leading manufacturing hub. Modi envisions India as a developed nation by 2047.

The proposed shipping entity, which has not yet been named, will be jointly owned by state-run enterprises in the oil, gas, and fertilizer sectors, as well as the state-run Shipping Corporation of India and foreign companies.

The primary objective is to reduce freight expenses to foreign entities by at least one-third by 2047. Current projections indicate that freight costs will rise to $400 billion by 2047, with Indian firms currently spending $75 billion on foreign vessel usage out of the $85 billion spent on freight in the fiscal year 2019/20.
India’s hashtag#shipping fleet, consisting of around 1,500 large vessels including tankers, gas carriers, container ships, and dry bulk carriers, has struggled to keep pace with the nation’s expanding trade, especially with increasing energy imports and refined oil exports.

In January, India’s oil and shipping ministries reached an agreement for all state-run oil firms and the new company to collaborate, according to a government document seen by Reuters. They plan to leverage the expertise of the Shipping Corporation of India in areas such as tanker acquisition, ownership, operations, and other shipping domains.

The new company will be headquartered at GIFT IFSC, a financial hub in Gujarat, India, designed to compete with global counterparts like Singapore by offering fiscal incentives and a streamlined regulatory framework.
Initial capital for the venture is expected to come from a maritime development fund of approximately 300 billion rupees ($3.6 billion) through a collaboration with major port authorities, according to a primary source.

To facilitate low-cost, long-term financing for shipbuilding, the ministries propose that state-run entities enter into 15-year charter agreements with the new company, moving away from the current practice of booking individual voyages or short-term charters.
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Vikas Pandey Ravi Shankar, FICS
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