India to Launch New Shipping Firm, Aims to Expand Fleet by 1,000 Ships in Next Decade

India is looking to establish a new shipping company aimed at expanding its fleet by at least 1,000 ships over the next decade, according to two government officials. This initiative is part of the country’s broader strategy to capture a larger share of revenue from increasing trade as it seeks to enhance its infrastructure and manufacturing capabilities. Prime Minister Narendra Modi, who recently secured a third term, has set an ambitious goal for India to become a developed nation by 2047.

The planned company, yet to be named, will be jointly owned by state-run enterprises in the oil, gas, and fertilizer sectors. These industries will provide business for the new firm alongside the state-run Shipping Corporation of India and international partners. The primary objective is to reduce reliance on foreign shipping firms, thereby cutting freight costs by at least one-third by 2047.

One source, speaking on condition of anonymity, revealed that freight costs for Indian companies could rise to $400 billion by 2047 due to increased trade volumes. In the 2019–20 financial year, Indian firms paid $85 billion in freight costs, with $75 billion going to foreign vessels. This dependency on foreign carriers is partly because India’s shipping fleet has not kept pace with its trade growth, particularly in energy imports and refined oil product exports.

India’s current fleet includes approximately 1,500 large vessels, such as tankers, gas carriers, container ships, and dry bulk carriers. In January, a government document indicated that the oil and shipping ministries had agreed to collaborate, with the Shipping Corporation of India providing expertise in tanker acquisition, ownership, and operations.

On May 16, a joint working group comprising government and industry officials was formed to develop a roadmap for the new company. This entity will be headquartered at GIFT IFSC, a financial center in Gujarat, which aims to rival hubs like Singapore by offering fiscal incentives and a streamlined regulatory environment.

The new company will receive initial capital from a maritime development fund of approximately Rs 30,000 crore ($3.6 billion), to be established in partnership with major port authorities. To secure low-cost, long-term financing for shipbuilding, the ministries propose that state-run companies enter into 15-year charter agreements with the new firm, a significant departure from the current practice of shorter-term charters.

State-run companies will also have the opportunity to become stakeholders in the new ship-owning and leasing entity. The plan includes consolidating cargo demand from various ministries, particularly those involved in the energy and fertilizer sectors.

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