Upgrading shipyards, Pg8

Key Highlights:

• A new package of ₹69,725 crore has been announced to revitalize India's shipbuilding and maritime ecosystem, replacing the 2015 package set to expire in March 2026.
• India's capacity to build large merchant ships is currently minuscule, with only a few small ships built in the last 10 years.
• The plan aims to upgrade shipyards with cutting-edge technology, promote new yards, and support shipowners in financing new builds.
• Globally, shipbuilding has been honed into a fine art, with processes like keel-laying-to-waterborne taking only three to four months.

Detailed Insights:

• The previous package of 2015 was largely a failure, raising questions about the success of the new initiative.
• Indian shipyards lack the length, crane capacity, space, and capability for prefabrication compared to Korean, Japanese, or Chinese yards.
• Ancillaries are a bottleneck, leading to turnaround times of about two to three years in India, causing shipowners to avoid ordering new builds.
• China has comprehensively developed shipbuilding, including establishing institutions for manpower training.
• Incentives to promote shipbuilding need to include long-term offtake possibilities, as Indian shipowners lack long-term demand visibility.
• India's green fuel production policy could be leveraged to build green ships and secure offtake through long-term shipping contracts.
• Long-term shipping contracts and time charters for imported coal and crude oil will spur shipbuilding in India.
• Terming ship newbuilds as infrastructure has reduced finance costs, but this benefit primarily applies to large vessels.

Key Concepts Involved:

• Shipbuilding: The design and construction of ships and other floating vessels.
• Merchant Ships: Vessels used for transporting cargo or passengers for commercial purposes.
• Gross Tonnage: A measure of a ship's total internal volume, used for assessing fees and regulations.