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What does the global shipbuilding industry look like, and where is India?
India’s nascent shipbuilding industry is poised for significant growth, attracting interest from major economies like Japan and South Korea. Union Minister of Ports, Shipping, and Waterways Sarbananda Sonowal revealed that these countries are exploring opportunities to invest in India’s shipbuilding sector. Potential collaborations could include direct investments, joint ventures, and technology sharing, reflecting the global confidence in India’s maritime potential.
The Ministry of Ports, Shipping, and Waterways aims to elevate India’s position from its current rank of 22nd in global shipbuilding to
the top 10 by 2030, and the top five by 2047, as part of India’s Maritime India Vision 2030.
What is shipbuilding?
Shipbuilding refers to the construction, repair, and maintenance of vessels used for transportation, defense, and trade. It includes a range of ships, from small boats to large tankers and warships. Shipbuilding is carried out in specialised facilities called shipyards, which are equipped to handle large-scale projects and complex assembly processes.
India’s shipbuilding legacy
India’s coastal regions, particularly Gujarat, Bengal, and Odisha, were major hubs for shipbuilding in ancient times. They facilitated trade within Southeast Asia, with Africa and West Asia. Under the British colonial era, shipyards in India, such as Mazagon Dock in Mumbai (established in 1774), primarily constructed vessels for the British navy and merchant fleets.
After independence in 1947, India began rebuilding its shipbuilding industry. Public sector enterprises such as Mazagon Dock Limited (MDL) and Cochin Shipyard Limited (CSL) played a key role in constructing ships for the Indian Navy, Coast Guard, and commercial sectors.
Size of shipbuilding industry
The Shipbuilding Global Market Report 2024, estimates the global shipbuilding market size to grow from $207.15 billion in 2023 to $220.52 billion in 2024 at a compound annual growth rate (CAGR) of 6.5 per cent. This expansion is driven by economic growth in emerging markets, increased demand for cruise ships, growth in seaborne trade, and supportive government policies.
The report added that Asia-Pacific was the largest region in the global shipbuilding market in 2023, followed by Western Europe. Major countries involved include China, South Korea, Japan, India, Germany, USA, and others.
India’s shipbuilding market value and growth
India’s shipbuilding industry is experiencing exponential growth. In 2022, it was valued at $90 million and is projected to reach $8,120 million by 2033, with an astounding CAGR of 60 per cent, according to Finextra Research. This growth is attributed to factors like government support, strategic location, labour cost advantages, and a focus on niche segments such as offshore support vessels and ferries.
The Ministry of Ports believes that if demand for India’s shipping market is “adequately targeted by Indian shipyards”, it may result in an opportunity to the extent of over $237 billion (Rs 20 trillion) by 2047.
Maritime India Vision 2030
Maritime India Vision 2030 is a strategic initiative launched by the Indian government to strengthen the country’s maritime sector over the next decade. It has set a bold target to elevate India’s global ranking in shipbuilding and ship repair from over 20th place to the top 10 and an ambitious goal has been set for the top-five position, as outlined in the Amrit Kaal Vision 2047.
As of February 2023, it estimated an investments to the tune of Rs 1,00,000 to 1,25,000 crore for capacity augmentation and development of world-class infrastructure at Indian ports.
Factors affecting growth of shipbuilding industry in India
Factors that are boosting shipbuilding industry in India, as reported by
Finextra Research, are the following:
Government support: Policy initiatives such as the Scheme for Financial Assistance to Shipyards in India (SFAS) and a focus on enhancing indigenous shipbuilding capabilities are driving growth in the shipbuilding sector.
Strategic location: India's extensive coastline and proximity to major shipping routes provide a natural advantage for shipyards, helping reduce transportation costs and turnaround times.
Competitive labour costs: India offers a competitive edge with lower labour costs compared to other shipbuilding nations, making it an attractive option for international clients.
Focus on niche segments: Indian shipyards are specialising in categories like offshore support vessels, dredgers, and ferries, targeting specific market demands.
Countries leading in shipbuilding
Currently, India holds only 0.06 per cent of the global shipbuilding market, a stark contrast to the dominance of China, South Korea, and Japan, which collectively control 85 per cent of the industry. To compete, the Indian government has announced plans to build multiple shipbuilding clusters in collaboration with coastal states.
In 2023, China, South Korea, and Japan remained at the forefront of the shipbuilding market, thanks to their advanced infrastructure and expertise. European countries such as Italy, Germany, and Finland also made notable contributions, emphasizing specialised vessels and luxury cruise ships. These dynamics highlight the economic priorities and capabilities of these nations, as well as the global demand for a variety of ships.
Here are the top 20 countries listed in terms of passenger and cargo ship exports in 2023, according to data from The Observatory of Economic Complexity and the International Trade Centre (ITC).
China- $25 billion
South Korea- $16.7 billion
Japan- $9.6 billion
Italy- $5.1 billion
Germany- $3.9 billion
United Arab Emirates- $2.5 billion
Finland- $2.2 billion
France- $2.2 billion
Denmark- $1.9 billion
Poland- $1.6 billion
Cyprus- $1.3 billion
India- $1.12 billion
Belgium- $993 million
Turkey- $658 million
Ivory Coast- $629 million
Philippines- $462 million
Marshall Islands- $439 million
Indonesia- $274 million
Croatia- $271 million
Netherlands- $249 million
India’s top shipbuilding companies
India’s two key shipbuilders, MDL and CSL, have laid a strong foundation for the country’s maritime sector. MDL, known for its role in constructing warships for the Indian Navy and Coast Guard, has delivered over 800 vessels since its inception. CSL, the largest shipbuilder in India, specialises in constructing offshore vessels, oil tankers, and aircraft carriers, along with being the largest ship-repair facility in the country. Both companies play pivotal roles in advancing India's maritime ambitions.
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