Indian Firms Eye Shipbuilding

Wednesday, September 26, 2007
Indian firms are increasingly getting into ship building and repairing as shipbuilding orders are expected to rise significantly to meet the boom in seaborne trade and increased offshore oil exploration. The local industry is expected to expand to $20b by 2020 from close to $5b now, a report by maritime consultants i-maritime Consultancy Pvt Ltd said, which is about 1 percent by value of total global shipbuilding orders. Besides subsidies given by the Indian government to local shipbuilders, which is a big incentive, a major part of the world shipping fleet is very old and due for replacement, Chief Financial Officer Dhananjay Datar of ABG Shipyard said. Engineering firm Larsen & Toubro already has one ship building yard in Gujarat state and plans to invest about $378.7m for shipbuilding and a repair yard. Gujarat-based Adani group is setting up a shipbuilding and repair yard at a cost of about $252.5m. Earlier this month, a media report said Reliance Industries plans to spend $2b on shipbuilding and dredging. While shipbuilding steel used to be imported, Indian steel mills have started manufacturing steel plates used in shipbuilding. Essar Steel is already manufacturing shipbuilding steel and plans to increase it with the commissioning of a 1.5-million-tonne plate plant in Gujarat next year. The government provided a 30-percent subsidy on value of ships built by Indian yards, which would sail under a foreign flag. This concession was for a 5-year period to August 2007. The industry hopes this would be extended to help compete with their overseas competitors. This subsidy is also given to certain ships built for the local market. ABG Shipyard and its competitor Bharati Shipyard, which builds sophisticated offshore platform supply vessels, have started building rigs. Asia has the world's largest rig builders -- Keppel Corp and SembCorp Marine. [Source: Reuters]

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