Mundra Ahoy! Gautam Adani Sets Sail for Shipbuilding at Adani Port

Mumbai: Billionaire Gautam Adani plans to start building ships at the group’s flagship port in Mundra, India’s largest port. With shipyards in China, South Korea, and Japan booked until at least 2028, global fleet owners are looking at alternative sites like India for new vessels.

India’s Ambitious Shipbuilding Goals

India aims to become a top 10 shipbuilder by 2030 and a top five by 2047, according to the Maritime India Vision 2030 and Maritime Amrit Kaal Vision. Currently, India ranks 20th in the world commercial shipbuilding market with a tiny share of 0.05%. Indian-owned and flagged ships carry about 5% of the country’s total overseas cargo.

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Adani’s shipbuilding plan is part of a ₹45,000 crore expansion for Mundra Port, which recently received environmental and coastal regulation clearance, according to the Expert Appraisal Committee (EAC) attached to the ministry of environment, forest, and climate change.

Industry Shifts Towards Green Ships

The shipbuilding move aligns with the global shift towards green ships to meet decarbonization goals. Over 50,000 new vessels are needed in the next 30 years to replace existing fleets.

India’s potential commercial shipbuilding market is estimated to be worth $62 billion by 2047, according to a KPMG document for a workshop held by the ministry of ports, shipping, and waterways. The ancillary industry could add $37 billion and create about 12 million jobs.

Increasing Annual Shipyard Output

To meet the Maritime India Vision 2030 and Amrit Kaal Vision targets, India’s annual shipyard output needs to increase from 0.072 million gross tonnage (GT) to 0.33 million GT by 2030 and 11.31 million GT by 2047, according to KPMG.

To achieve 5% of Indian overseas cargo carriage and grow domestic cargo capacity by 2047, an additional fleet capacity of 59.74 million GT is needed over the next 23 years.

Advantages for Adani

Adani has the land and environmental approvals to quickly enter the shipbuilding sector, unlike new entrants who face lengthy land acquisition and green clearance processes. The SEZ status will help Adani overcome financial and tax challenges faced by the local shipbuilding industry, which struggles to compete with Chinese yards.

Indian shipyards often lose out to foreign yards in both domestic and global markets due to a cost disadvantage of up to 35%. The government provides state aid to neutralize taxes and duties and offset the cost differential, but it’s still not enough to compete with top global yards.

Current State of Indian Shipyards

India has eight state-owned yards and about 20 private facilities, including one run by Larsen & Toubro Ltd at Kattupalli near Chennai. Most state-owned yards focus on government-funded naval ships, which are considered safer than commercial ships.

Private yards like L&T build only defense vessels. L&T entered the sector during the 2005-07 shipbuilding boom but shifted to defense shipbuilding during the global financial crisis to stay afloat.

The capacity for building commercial vessels is limited, as the industry is skewed towards naval vessels, according to KPMG. “The world is looking towards Indian yards as an alternative shipbuilding market. We need to gear up faster,” said Sanjiv Walia, adviser, Shipyards Association of India.