As the world’s third-largest importer of crude oil, the Indian government is planning to use its domestically produced tankers to transport crude oil, with plans to build a transportation fleet of more than 100 domestically produced tankers over the next 15 years to reduce dependence on foreign-built ships.
The Indian government has reportedly earmarked 850 billion Indian rupees (about $10 billion) to build 112 tankers by 2040 at domestic shipyards. The first phase will build 79 ships, of which 30 are medium-range (MR) tankers. The first 10 tanker orders will land as early as this month and will be financed through long-term charter agreements to support the financing, sources said.
Under the plan, the Indian government aims to increase the share of domestically produced tankers in the fleet from the current 5 percent to 7 percent by 2030, and by 2047, this share is planned to rise to 69 percent. The Ministry of Shipping and the Ministry of Petroleum have yet to publicly confirm the plan, but anonymous officials have revealed that this overall strategy includes upgrading maritime transport capacity for coal, fertilizer and steel in addition to crude oil shipments.
As the world’s third largest importer of crude oil, India currently relies on international shipowners to transport 90% of its imported crude oil in foreign vessels. In terms of import structure, Russian crude takes the largest share, followed by Iraq, Saudi Arabia and the UAE. At present, India’s state-owned oil companies operating fleet is not only seriously aging, and the vast majority of ships from overseas. Officials from both India’s Ministry of Shipping and the Ministry of Petroleum have expressed a willingness to address this strategic vulnerability, and MR tankers are ideally suited to these relatively short trade routes.
The tanker construction plan continues the Indian government’s localized shipping strategy – in February this year, India announced the establishment of state-controlled Bharat Container Line (BCL), plans to spend money to build a hundred container ships of the ocean-going fleet, to independent capacity layout of the world’s major trade routes.
The Indian shipbuilding industry is currently limited in size and lacks production capacity to meet global standards. Experts believe that this is related to the lack of domestic demand for new ships. Currently, India’s largest domestically produced tanker, the MT Maharshi Parashuram, is 238 meters long and has a deadweight of about 93,000 tons, while the supertanker Oceania ULCC owned by China’s Minsheng Financial Leasing is 380 meters long and has a deadweight of about 441,000 tons. The two are very different in size.
According to Indian media reports, India’s tanker construction program will be centered on domestic shipbuilders, but does not rule out the possibility of establishing joint ventures with overseas shipbuilding groups. In fact, some observers have pointed out that, as the Indian shipbuilding industry is nearly “starting from zero”, if the lack of support from overseas shipbuilders, the ambitious goals set by the plan are afraid to be difficult to achieve, and there is no lack of people questioning its feasibility.
In order to make up for the gap in local capabilities, the Indian government is actively promoting cooperation with international shipbuilding companies. At present, the joint venture shipyard between South Korea’s HD Hyundai Heavy Industries and India’s state-owned shipyard Cochin Shipyard has been determined to be located in Thoothukudi, a port city in Tamil Nadu. The joint venture shipyard will be responsible for building large ships such as very large crude oil carriers (VLCCs), with an estimated investment of about 100 billion Indian rupees. In addition, the Indian government has also held preliminary negotiations with Nippon Yusen Kabushiki Kaisha (NYK Line) and South Korea’s Samsung Heavy Industries.