The Union ministry of shipping has proposed a joint venture between state-run Shipping Corporation of India (SCI) and a public sector oil marketing company for manufacturing very large oil tankers, said three people aware of the development.
Indian Oil Corporation Ltd (IOCL), the largest OMC and refiner in the country, is being considered as the preferred entity for forging the joint-venture with SCI.
India currently has less than 1% share of global shipbuilding market India, which has never made an oil tanker, currently has less than 1% share of the global shipbuilding market, which is dominated by China, South Korea and Japan.
The move is line with the government's 'Atmanirbhar Bharat' agenda that aims to develop India's manufacturing sector. It will also ensure energy security as indigenous very large crude containers (VLCCs) or oil tankers would allow India to lower its dependence on foreign ships and insurance entities while reducing the risk of sanctions in war-like situations from impacting operations.
"It is felt that all the key aspects like leasing, operations and insurance should be handled by Indian companies. The shipping ministry has put in a proposal for developing VLCCs in the country with joint venture between SCI and an oil company," said one of the three people mentioned above, adding that the proposal is being considered by stakeholders, including the ministry of petroleum and natural gas
Another person said that although the proposal is on the table for consideration, it is at an early stage and would need time for taking a concrete shape.
"The infrastructure for building these large VLCCs would also be required to be set up in the country," said the second person.
India is the third largest importer of crude oil after the US and China, and the proposal for making oil tankers comes at a time when wars and conflicts have led to persistent supply concerns for oil, resulting in frequent volatility in the energy market.
Further, recent Western sanctions on ships carrying Russian oil have also intensified concerns. Russia has emerged as the top supplier of oil to India in the past couple of years catering about 35% of its oil imports.
Attacks on several global shipments at the Strait of Hormuz and the Red Sea area have also driven home the need for a home-grown fleet with operations and insurance being handled by Indian companies.
Shipbuilding is a key feature of the Centre's Maritime Indian Vision 2030. The vision document noted that shipbuilding is an industry with a unique feature – it has nearly 65% value addition coming from other technology and ancillary industries such as steel, electronics, engineering, and port infrastructure.
“Being an order-driven industry where each vessel is custom built, building an orderbook is essential for growth and sustenance of the shipbuilding industry. India has demonstrated strong shipbuilding capability in past with several shipyards delivering good quality vessels globally," it said.
