Some analysts pointed out that India, with its abundant labor resources, has the potential to shake the status of the three major shipbuilding powers, China, South Korea and Japan. This view has attracted widespread attention.
The Lloyd’s List pointed out: “The three major shipbuilding powers that account for more than 90% of the global shipbuilding market—China, South Korea and Japan—all face the common problem of an aging workforce. Japan and South Korea are already struggling with the issue of population aging, and China will soon face the same situation. This will present a major opportunity for India.”
India to surpass Japan and rank among the top three shipbuilding countries
India has set a target to become one of the top three shipbuilding markets in the world by 2047.
This year, the Indian government officially released strategic plans such as the “Maritime India Vision 2030” and the “Maritime Amrit Kaal Vision 2047” to cultivate its domestic marine shipbuilding industry. Leveraging its abundant labor force, low shipbuilding costs, and international partnerships, India plans to raise approximately 250 billion rupees (approximately US$2.87 billion) in marine development funds to enhance the country’s shipbuilding industry and marine infrastructure.
According to data from the United Nations Conference on Trade and Development (UNCTAD), China’s shipbuilding capacity will reach 39 million gross tons (GT) in 2024, followed by South Korea at 20 million GT and Japan at 9 million GT, ranking the top three in the world. They are followed by Vietnam at 720,000 GT, the Philippines at 660,000 GT, Italy at 450,000 GT, France at 280,000 GT, and India at 40,000 GT.
Currently, India is planning to increase its shipbuilding capacity to 9.5 million GT by 2047 through investment, surpassing Japan to become the world’s third-largest shipbuilding powerhouse.
In recent years, India’s shipbuilding industry has shown rapid growth. According to data from global market research agency Ken Research, in 2022, the scale of India’s ship repair and construction market was approximately US$90 million, expanding to US$1.12 billion by 2024, an increase of more than 12 times. It is expected to maintain an annual growth rate of over 60% by 2033.
The biggest advantage of India’s shipbuilding industry lies in the relatively young average age of its workforce. As the world’s most populous country with over 1.4 billion people, its average age is just 28. In contrast, according to estimates by the Korea Shipbuilding and Offshore Engineering Industry Human Resources Development Committee, the average age of the workforce in South Korea’s shipbuilding industry is expected to be around 44 to 45 by 2024. With the aging population and looming labor shortages, the industry will face even more severe challenges in the future. It is estimated that South Korea’s shipbuilding industry faces an annual labor shortage of approximately 12,000 people, which could reach 130,000 by 2027.
India’s financial support and subsidy policies will also be an important factor in the competitiveness of its shipbuilding industry, encouraging foreign shipowners to place orders. In February this year, India allocated approximately US$2.8 billion to strengthen its domestic shipbuilding and shipping industries.
Lloyd’s List noted that China has the lowest cost per kilogram of completed ship hull, at approximately $2.50. Subsidized India, at approximately $3.50, is lower than the approximately $4.50 to $50 per kilogram of Vietnamese and Philippine shipyards currently competing with it. Europe, at $10 to $11, remains relatively high compared to China and India. Lloyd’s List stated, “Subsidies will make Indian shipyards competitive in shipbuilding costs.”
Given the unique characteristics of the shipbuilding industry, new ship orders can drive regional industrial recovery, including production and employment, and directly or indirectly create added value across multiple sectors, including shipping, ship management, marine equipment, shipbuilding equipment, machinery and steel, and electrical and electronics. Analysts believe this is positive for India’s shipbuilding industry, which enjoys a plentiful workforce.
Lloyd’s List said: “Another major advantage of India’s shipbuilding industry is that as a fundamental industry supporting local communities, every job created in the industry generates three to five additional jobs in the local area.”
Infrastructure and labor alone cannot control the shipbuilding supply chain
However, some argue that developing India’s shipbuilding industry requires the support of an entire ecosystem (including shipbuilding equipment, marine equipment, and MRO). Simply investing in modern infrastructure and recruiting a young workforce will not effectively control the entire shipbuilding supply chain. Building a supply chain encompassing equipment manufacturing, hull construction, ship completion, and advanced technology research and development is a lengthy process.
A representative from Lloyd’s Register (LR) stated: “In the shipbuilding industry, facility construction and manpower supply are not the only important factors. The priority is to improve the entire ecosystem that supports shipbuilding. The biggest advantage of China’s shipbuilding industry at present is its ability to control the ecosystem that supports 85% of the world’s shipbuilding capacity.”
When the entire shipbuilding supply chain runs smoothly, shipbuilding time can be shortened. Conversely, if production schedules or ship deliveries are delayed, not only will compensation have to be paid, but the reputation of the shipbuilding industry may also be negatively affected.
Lloyd’s List said: “If the Indian shipbuilding industry is to become a shipbuilding powerhouse, it must overcome the negative perception of shipowners about delays in new ship deliveries. Only then can the Indian shipbuilding industry establish a good reputation.”