India, the third-largest economy in Asia, has unveiled bold plans to establish a new shipping company with a goal of increasing its fleet by at least 1,000 ships over the next decade. The move aims to capture a larger share of revenue from the rapidly growing trade sector and solidify India’s position as a key player in the global maritime industry.
Investing in Infrastructure for Enhanced Manufacturing Capabilities: As part of its broader strategy to boost its manufacturing capabilities to fulfill the vision of Prime Minister Narendra Modi for India to become a developed nation by the year 2047, the Indian government is investing heavily in infrastructure. This includes the establishment of the new shipping company, which will be jointly owned by state-run entities in the oil, gas, and fertilizer sectors, in addition to the state-owned Shipping Corp of India and foreign firms.
Reducing Freight Expenses for Foreign Companies: According to insider sources familiar with the matter, the primary objective of the new shipping company is to significantly reduce freight expenses for foreign companies in accordance with India’s long-term aspirations. The goal is to achieve a reduction of at least one-third in freight costs by the year 2047. Current projections suggest that freight costs could escalate to a staggering $400 billion as India’s exports and imports continue to grow.
Mitigating the Dependence on Foreign Carriers: In the financial year 2019/20, Indian companies reportedly paid a substantial $85 billion in freight costs, with a significant portion of $75 billion dedicated to foreign vessels. This increasing reliance on foreign carriers stems from the fact that India’s shipping fleet has struggled to keep up with the country’s expanding trade, particularly concerning energy imports and exports of refined oil products.
Collaboration of State-Run Oil Firms and Expertise of Shipping Corp of India: Recognizing the need for a comprehensive approach, India’s oil and shipping ministries agreed in January for all state-run oil firms, along with the new shipping company, to join forces and collaborate. A government document reveals plans to leverage the expertise of the well-established Shipping Corp of India in key areas, such as tanker acquisition, ownership, operations, and other aspects relating to the shipping industry. Furthermore, on May 16, both ministries took the initiative of establishing a joint working group, comprising representatives from the government and industry, to formulate a strategic plan. This collaborative effort aims to ensure the efficient implementation of the ambitious plan to boost India’s shipping capabilities.
A Game-Changing Leap for India’s Shipping Industry: India’s decision to establish a new shipping company and aggressively expand its fleet with 1,000 additional ships marks a significant leap forward for the country’s maritime industry. With the clear goal of reducing freight costs and seizing a larger share of trade revenue, India aims to bolster its manufacturing capabilities and catapult itself into the league of developed nations by the year 2047. As India continues its substantial investments in infrastructure, including the establishment of the new shipping company, it is apparent that the nation’s determination to shape its maritime destiny is unwavering. The upcoming years promise to be transformative for India’s shipping industry, as it strives to enhance efficiency, lower costs, and solidify its position as a formidable player in global trade.
