Shipbuilding, a sector less talked about in India

If you want to build a ship, don’t drum up people together to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea”

  • Shipbuilding means the construction of ships and floating vessels. It is normally carried out in a specialized facility known as a shipyard. Shipyard is a place where along with Ship Building, Ship Braking & Ship Repairing works are carried out. The industry builds ships for commercial as well as military purposes. The builders of Ship are termed as “Shipwrights”.
  • Shipbuilding along with the ship repairs (considering both – commercial and military) are referred to as “naval engineering”.
  • Shipbuilding process take account of all processes for ships construction beginning with the material receiving (including pre-treatment operations) up to the final assembly and launching of the ship.
  • Usually in shipping industry, a ship is sold before the construction begins and each ship is made to the needs of the owner.  The construction of ship usually takes between 1 to 3 years.
  • Different types of Ships can be classified into Commercial vessels, Naval vessels, Fishing vessels, Weather vessels and inland and coastal boats.
  • The Indian shipping industry includes four basic constituents i.e. Ship building & breaking, Shipping Services, Dredging Operations and Other port operations.
  • The Indian Ship-Building Industry could broadly be categorized into following categories:-
  1. Large ocean-going vessels which caters to the needs of overseas as well as coastal trades
  2. Medium size specialized vessels like Port Crafts, Fishing, Trawlers Offshore vessels, Inland and other smaller crafts and;
  3. Military crafts and Coast Guard Vessels.

In India, presently there are 27 Shipyards, 6 under central public sector , 2 under state governments and 19 under private sector.

Ship

Current Government Regulations:-

  • Tonnage tax Scheme: The Government introduced the tonnage tax scheme with effect from 1st April 2004 which helped the Indian shipping companies to compete in the international market as well as it augmented the growth of the Indian fleet and its tonnage.
  • The Government of India has launched ‘Maritime Agenda 2020’ as on January, 2011 for the shipping sector, which includes the following goals:
  1.  To bring new shipbuilding subsidy scheme and increase India’s share in global shipbuilding to 5% from the present 1%.
  2. Increase port capacity of around 3200 MT to handle the traffic of around 2500 MT by 2020 and Investments of INR 1650 Bn in shipping sector by 2020.
  3. Promoting coastal shipping so as to decongest roads and is environment friendly.
  4. To establish ‘Freight Exchange’, Ombudsman and Tribunals for Shipping matters, independent Marine Casualty Investigation Cell and also introduction of passenger ferry services between India and nearby countries.
  5. The Government of India has plans to setup seven major ports by 2017 with an estimated investment of INR 350 Bn, for which it has plans for special purpose vehicles (SPVs) to execute these seven big-size ports at Orissa, Andhra Pradesh, Tamil Nadu, Kerala, Karnataka, Maharashtra and Gujarat

Is Depreciating rupee any good?

  • As almost 90% of the total trade worldwide, by volume and 70% by value is through sea, the shipping industries are one of the most heavily affected industries in terms of foreign exchange fluctuations.
  • Revenues are mainly obtained in foreign currency hence a depreciating rupee augurs well for the export companies.
  • The shipbuilding industry is characterized by its cyclical nature as its primarily depended on demand and supply in markets. Demand is function of global trade, geographical balance of trade and length of haul, whereas the supply is function of time required for shipbuilding, new shipbuilding orders and scrapping of existing tonnage.
  • The demand Order for Ships in India is only 2%, which is comparatively lower than other countries orders. With the foreign and new shipping companies coming forward to place new building orders on Indian yards, these would augment the order books to grow in future.

Did you know?

As per ISL Shipping Statistics and Market Review Sept./Oct., 2012, India (ranked 11th) is one of the top 20 economies for shipbuilding based on deliveries in the year 2011 (81 vessels of 1,415,000 DWT), though its share is only 0.7% in terms of compensated gross tonnage (cgt) in the world.

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