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India needs to spend $4bn renewing fleet

India needs to spend $4bn renewing fleet

Mumbai: The Indian shipping industry will need to spend about US$4bn on fleet renewal as more than half of the ships owned by Indian companies will have to be scrapped in five years, according to the Indian National Shipowners' Association (Insa).
The threat of scrapping is quite real at a time when the share of Indian ships in the country's overseas sea-borne trade has slipped to 13.7 per cent from a high of 40 per cent in the late 1980s, while the share of foreign companies has been rising steadily, reported the Shipping Times in Singapore.
'For expansion and replacement along with the International Maritime Organisation's (IMO) phase-out programme, the country will have to invest US$4 billion by 2009,' Insa president Yudhishthir Khatau told India's Business Standard.
As of March this year, Indian companies owned 739 ships. Altogether, 56 per cent of the ships are due to be scrapped in five years. The average age of the Indian fleet is about 18 years, and 40 per cent of the ships are more than 20 years old. According to international practice, all ships over 17, if they have to continue in service, must be overhauled and redeployed. Even after that, they can serve only up to the age of 25. Internationally, the average age for retiring ships is 22 years. Most ships owned by private Indian companies are single-hull, all of which have to be phased out by 2010 under IMO norms, which has revived interest in the shipbuilding sector across the globe as the business at stake is worth US$250bn.
However, with global shipyards brimming with orders and unable to take on any fresh ones, interest is building among Indian players to set up yards or expand existing facilities. Going by recent trends, the western Indian state of Gujarat appears to be the hub for new shipyards, with the state likely to emerge as Asia's latest shipbuilding focal point. The Kandla port is preparing a feasibility report on setting up a 4bn rupee shipbuilding facility. Nearby, the Adani port has also on its drawing board a proposal to set up a 10bn rupee shipyard at Mundra. Also, IL&FS and Nikhil Gandhi's Sea King Infrastructure are reported to have tied up with Singapore's SembCorp for another 45bn rupee shipyard project. Larsen & Toubro is also looking to increase investments, while companies such as Bharati Shipyard and ABG Shipyard have orders in place for the next 3-4 years. The Ruia Group is planning to set up a 10bn rupee shipbuilding and repairing facility coupled with a sector-specific special economic zone near Haldia port in West Bengal.  [05/10/06]

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