The shipbuilding industry will hold tremendous growth potential in the coming years as over 41 per cent of India’s ships are in the 20-plus age group, according to a study by the Associated Chambers of Commerce and Industry of India (Assocham).
The chamber has asked shipbuilders to ramp up capacity as the industry’s aging fleet requires replacement.
“Ships older than 20 years require frequent and extensive repair and maintenance. This augurs well for the Rs.7,300-crore shipbuilding industry. However, domestic shipbuilders must invest extensively to take advantage in this regard,” according to the study. “The government needs to act as a facilitator and create opportunities for a healthy business climate to attract fresh investments in the shipping sector,” D. S. Rawat, Secretary-General of Assocham said. India has a total of 1,122 vessels in its fleet, and 41 per cent of these (about 466) vessels fall in the age group of 20 years and more. Considering that the average life of a ship is about 26 years, most existing vessels need to be replaced, the study says.
“Assuming that out of the 41 per cent vessels, about seven per cent of them get replaced, then this would translate into 33 ships. An average cost of constructing a large vessel is roughly about $100 million (Rs.620 crore), therefore, the size of such an opportunity would amount to $3.3 billion (Rs. 20,460 crore),” the study says.
“As such, the domestic shipbuilders need to pull up their socks and invest in capacity enhancement to take advantage of this opportunity,” said Mr. Rawat.
India accounts for one per cent of the global shipbuilding industry, worth about Rs.7.30 lakh crore. China, South Korea and Japan cater to over 80 per cent of the global shipbuilding industry.