India has a maritime heritage that dates back thousands of years and has heavily influenced the evolution of Indian society. However in independent India, the sector has never received the kind of attention it has in the last two years.
This is reflected in a number of policies and initiatives:
- Granting of infrastructure status to the shipbuilding sector which makes it eligible for tax and other financial incentives.
- Allowing 100 % foreign direct investment in the shipbuilding sector, and construction & maintenance of ports and harbors.
- Opening the defense shipbuilding for the private sector and allowing for 49 % foreign direct investment.
- 105 new inland waterways to be developed in addition to the existing 6 operational waterways.
- Coastal shipping to be developed as a backbone for the transportation of raw materials like coal, fertilizers, and minerals such as iron ore.
- Project Sagarmal – Port led development of coastal India in which 32 industrial clusters (steel, cement, manufacturing, refineries, power plants etc.) will be developed around the ports and shipyards.
The reasons for which the Indian government is focused on the maritime sector are:
- Ship building & ports are labour intensive activities which lead to employment generation
- The sector has the ability to play a crucial role in the government’s “Make in India” initiative
- It has cascading effects on the trade sector to make it globally competitive
- To strengthen the naval & coastguard capabilities for the protection of the country’s maritime borders & interests
But what does this mean for Norwegian Maritime Companies?
Let’s look at some areas which are likely to be potentially large opportunities in the years to come.
Although commercial shipbuilding is not doing great, there is a lot of focus on strengthening naval and coastguard capabilities:
- India has set an ambitious target of 5 % global ship building market share by 2020 against less than 1 % today.
- The Indian Navy & Coastguard fleet is ageing fast which requires maintenance & modernization in the short term
- The Indian Navy will spend at least € 30 billion on modernization up to 2020: this will involve demand of harbor utility tugs, auxiliary barges, feed water barges for aircraft carriers, Offshore Patrol Vessels (OPVs) and ammunition barges etc.
- Special requirements for deck load pontoons (DLPs) and crane barges
- Export opportunities from India: The government plans to develop India as a hub for the export of hulls for OPVs, Corvettes, fast-attack crafts (FACs), patrol crafts, and auxiliary vessels.
Small Scale Distribution of LNG
LNG has already emerged as a clean and green fuel for the future. However, socio-economic and environmental challenges to the distribution of LNG in India demands innovative solutions.
- Share of gas in India’s overall primary energy consumption was about 7 % in year 2014 compared to 30 % globally. However it is likely to be 20 % in 2025
- The demand in 2020 is likely to grow by about 45 % from what it was in 2015
- Setting up of LNG terminals will create demand for regasification units, bio-off gas compressors, cryogenic pumps, heat exchangers etc.
LNG Fuelled Barges and Vessels
There are two possibilities here:
- Supply of hybrid engines which can operate with MOD as well as LNG
- Purely LNG fuelled engines
Indian Government is planning to make it mandatory for all the new vessels being manufactured in Indian shipyards to be LNG based.
India’s LNG imports are likely to grow by about 7% annually over the next 5 years. 43 projects with capacity of 300 MTPA are under construction which requires new LNG carriers. LNG Containment Technology and tank design, Floating Storage Units (FSU) etc. will be in demand in years to come.
Design of Vessels for Shallow Draft
Based on contact with the Indian shipyards, there is a lot of potential for Norwegian ship design companies for the development of vessels which can navigate in shallow waters (draft of about 4 m) of inland waterways and along the coast. All the inland waterways under development in India will maintain a draft of about 4 m.
Design & Manufacturing of River Sea Vessels (RSVs)
RSV’s are vessels which can navigate seamlessly in rivers as well as in shallow seas.
- India plans to shift transportation of coal, iron ore & fertilizers from the clogged railway network to inland waterways and coastal shipping.
- Coastal shipping routes have been opened between India & Bangladesh for transportation of goods till Myanmar, Thailand and other South East Asian countries.
- Both these developments will generate demand for mini bulk carriers (MBCs) and barges.
Opportunities in Sustainability and Safety Initiatives
India needs to comply with global conventions and regulations like the Ballast Water Management (BWM), and the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships among others. This will generate demand for equipment in areas like ballast water treatment, oil spill containment, firefighting and other lifesaving systems, marine environment pollution monitoring.
- India is a world-leading ship breaking hub:
In 2014 about 30-35 % of the total ships recycled globally were broken in Indian ship breaking yards. However, India has not signed the “Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships” yet. Once the convention comes into force, there will be demand for new equipment and systems that comply with the requirement of the convention.
- Energy Efficient Ship Design:
Ships being built in Indian shipyards need to comply with the Energy Efficiency Design Index (EEDI). This has created opportunities in areas like hull design, propulsion technology, design of waste heat recovery systems, optimum ballast management etc.
Port Modernization and New Ports
India is developing 5 greenfield ports and 2 container transshipment hubs. These are likely to generate demand for harbor tugs, multipurpose tugs, pilot launches, multi-utility crafts, dredgers etc.
Although these are major areas where the Indian maritime sector will see a lot of growth, there are few other areas as well which should be mentioned:
- Roll-On/Roll-Off (RORO) Vessels
- Will see growth with India emerging as major export hub for automobiles
- Preference is also being given to shift automobile transportation from railways & roads to coastal shipping
- Small & Mid-size passenger vessels
For urban transport in coastal areas and cities with waterways. A pilot project has been initiated in Kochi in the state of Kerala.
- Cruise Tourism
- Both river and sea cruises will see rapid expansion
- The Indian government has identified Mumbai, Murmagaon, Mangalore, Chennai & Kochi as locations for the development of cruise terminals
- River cruises will start in Inland Waterways 1 in river Ganges from early next year
- Modernization of fishing vessels & fishing equipment supplies
Development of the maritime sector is vital for India in order to sustain and support its rapid economic growth & achieve social development goals. With its strategic geographical location, India is bound to emerge as the hub of maritime activities in the Indian Ocean.
Norway, as a world leading maritime nation, has a lot to offer India in terms of technology, products, services and know-how. The way Norwegian companies approached China some years back, they need to do the same for India now. The Indian elephant moves slowly but the opportunities here are huge! Norwegian companies need to take advantage of the proactive policies and initiatives rolled out by the Indian government.
It’s difficult to do justice to all areas and highlight concrete opportunities in one blog post. This post will be followed by a series of articles where I will focus on each of the areas mentioned above.
Source: Opportunities Abroad