The global demand for ships is rising as maritime trade expands and naval fleets undergo modernization. The sector also has national security implications. South Korea, one of the leading shipbuilders in the world, is exploring collaboration with Indian shipyards to execute its burgeoning order book.
A high-level delegation of South Korea’s Hanwha Ocean Co Ltd, led by its Senior Vice President, Jin Su Lee, visited India recently. They met officials from Pipavav shipyard, run by Swan Defence and Heavy Industries Ltd, state-owned Cochin Shipyard Ltd, Hindustan Shipyard Ltd, and L&T Shipbuilding Ltd. The South Korean delegation also met officials in the Ministry of Ports, Shipping, and Waterways.
The two countries are exploring collaboration in the shipbuilding sector. South Korea has its yards booked until 2028, and India, in turn, wants to become one of the top 10 shipbuilders globally by 2030 and one of the top five by 2047. Statistics show over 50,000 ships will be built over the next 30 years.
Presently, India holds less than 1 percent of the global shipbuilding market share. TK Ramachandran, Secretary of the Ministry of Ports, Shipping and Waterways (MoPSW) said in 2024 that India is looking at South Korea and Japan for investments and technology transfer to establish shipbuilding and ship repair clusters in India. The states of Andhra Pradesh, Gujarat, and Odisha have expressed interest in establishing maritime clusters.
The South Korean shipbuilding sector is dominated by three big shipyards: Samsung Heavy Industries, Hanwha Ocean, and HD Hyundai Heavy Industries. In 2024, HD Korea Shipbuilding, Hanwha Ocean, and Samsung Heavy Industries respectively secured orders for 112 vessels worth US$ 12.1 billion, 26 vessels worth US$ 5.7 billion, and 22 vessels worth US$ 4.9 billion.
China has been the top shipbuilder in the world for 14 consecutive years. It is a market leader in tankers, containers, and bulkers.
In the last decade, China has invested in dual-use shipbuilding capacity, and its order books extend till 2029, and it has no yard space till 2027. The demand for new ships is fuelled by the need to replace aging vessels and by the growing requirement for low-carbon ships.
China has captured 62.9 percent of the global shipbuilding orders. The Chinese yards have shifted their focus to more complex ship types, particularly gas carriers. The economic impact of the Chinese shipbuilding revenue surged dramatically to US$ 67.9 billion in the first two months of 2024, up 173 percent year-on-year.
China’s shipbuilding order book surged by 88.3 percent to 2,539 vessels, holding 55.5 percent of the global total. South Korea and Japan’s order books comprise 31.3 percent of the total.
The top five Chinese shipyards – CSSC Group, COSCO Group, Jiangsu Hanjiang Group, Nantong Xiangyu Group, and Yangzijiang Group – have secured 62.9 percent of the global order book. To execute the orders, China is reopening its mothballed yards.
On top of this, the South Korean shipbuilding sector is facing a shortage of 14,000 workers and would require 45,000 additional workers to fulfill the current order.
South Korea, in turn, is looking to partner with foreign shipbuilders.
An Indian delegation had visited South Korea, the first visit of its kind in nearly a decade, and had an extensive tour of the country’s top three shipyards. They also received a detailed briefing on the shipyard’s advanced technologies and eco-friendly shipbuilding processes.
While China is leading in production volume, South Korea remains dominant in high-value markets. Its LNG carriers and eco-friendly dual-fuel technologies are considered the gold standard in the shipping industry.
India, despite having 28 domestic shipyards, has limited capacity to produce small and medium-sized vessels, such as ferries, and cannot construct large-scale commercial ships.
Reining In China’s Rise In Shipbuilding
China has the world’s largest shipbuilding industry, producing more than half of the global commercial vessels and maintaining a fleet that surpasses the US Navy in size. By early 2023, Chinese shipyards had amassed orders for approximately 1,800 large commercial vessels, a staggering number when compared to the mere five such orders in the United States.
The US warships are getting fewer steaming hours because of growing maintenance delays and costs. It has been a troubling trend as the US is struggling to keep pace with China’s growing fleet and is also facing other adversaries at sea – including Russia.
A rattled Washington decided to give a strategic push to shore up the US shipbuilding sector through partnerships with key allies. The US has turned to allies such as South Korea, Japan, and India to counter China’s dominance, requesting assistance in strengthening its naval shipbuilding capabilities.
The US has entered an agreement with two Indian shipyards for the repair and maintenance of its auxiliary ships.
Putting India On The Shipbuilding Map
About 95 percent of India’s shipping trade is done through foreign-owned and foreign-flagged vessels. Almost 60 percent of the country’s ship repair work happens outside the country.
Taking a leaf out of the South Korean shipbuilding industry, India has proposed Rs 25,000 crore Maritime Development Fund (MDF), which will provide long-term, low-cost financial support and push towards indigenous ship-building. This has come in the wake of India’s lack of a financing ecosystem for the shipping industry. Entire value chain financing, insurance, ownership of ships, leasing, recycling, and repairs of ships happen abroad.
The Indian Shipping Ministry has put together a new shipbuilding policy that is expected to come into effect in 2026. Sustainability is at the center of this new policy. India intends to join the growing green shipping business by providing 30 percent financial help for ships that run on green fuels like methanol, ammonia, or hydrogen fuel cells. Additionally, 20 percent financial assistance will be provided to ships with electric or hybrid propulsion systems.
The new policy will provide viability gap funding (VGF) or financial support to make projects commercially feasible – for domestic shipbuilding. It is also contemplating introducing purchase preference so that any vessel seeking new registration for coastal cargo transport in India from fiscal year 2031 onwards would need to necessarily be built at a domestic shipyard.
