India plans to establish a new shipping company to significantly expand its fleet, aiming to boost trade.
India is set to create a new shipping company to expand its fleet by at least 1,000 ships over the next decade, as part of its efforts to capitalise on surging trade and reduce freight costs. The initiative, driven by Asia’s third-largest economy, aligns with Prime Minister Narendra Modi’s vision to transform India into a developed nation by 2047.
The yet-to-be-named company will be a joint venture between state-run firms in the oil, gas, and fertiliser sectors, and the state-run Shipping Corporation of India, along with foreign partners. This move is intended to cut freight expenses to foreign firms by a third by 2047, according to two government officials.
India currently has about 1,500 large vessels, but its fleet has not kept up with increasing trade volumes, leading to high reliance on foreign carriers. In 2019/20, Indian companies spent $85 billion on freight, with $75 billion going to foreign vessels. Projected freight costs could reach $400 billion by 2047 as trade volumes rise.
In January, India’s oil and shipping ministries agreed to collaborate, leveraging the Shipping Corporation of India’s expertise in tanker acquisition and operations. A joint working group was formed to develop a strategic roadmap, with the new firm based at GIFT IFSC in Gujarat.
The new entity will be funded by a maritime development fund of approximately 300 billion rupees ($3.6 billion). To facilitate financing, state-run companies are expected to sign 15-year charter deals with the new firm, shifting from shorter-term agreements. This consolidation of cargo demand from government ministries, particularly energy and fertiliser sectors, aims to streamline operations and enhance India’s shipping capacity.
