Demand for Offshore Vessels will Drive India’s Market

Friday, January 21, 2011

According to new analysis from Frost & Sullivan, the shipbuilding and repair market in India is poised to pick up momentum with the increasing penetration of Indian shipbuilding companies in the offshore vessels (OSVs) segment. Indian companies have established strong credentials in the building and repair of OSV, resulting in a spike in orders for such vessels from the Indian industry. The limited capacities related to OSVs in leading shipbuilding nations such as Japan and South Korea are resulting in diversion of orders to India, driving up the fortunes of the Indian shipbuilding and repair market.

Growth in multimodal transportation infrastructure and integrated logistics parks leads to significant logistic outsourcing opportunities. The aging fleet of shipping companies in India is another factor energizing prospects for the shipbuilding and repair market in the country.

The market earned revenues of $1.6b in 2010 and expects this to reach $3.5b in 2016.

“About 40 percent of the India-owned fleet is more than 20 years old, and Indian owners will need to spend about $4 billion to replace these during 2010-2015,” said Frost & Sullivan Transportation & Logistics Program Manager Srinath Manda. “In addition, the International Maritime Organization (IMO) has mandated the phasing out of all single-hull vessels by 2010, and single hull tankers constitute about 15.8 percent of the total vessels owned by Indian shipping companies.”

The future of the Indian shipbuilding and repair market looks promising and is likely to double in size in the next five to six years. The growth potential is further enhanced with the Indian Government aiming for the nation’s shipbuilding sector to attain a 5 percent share in the global market by 2017.

Although the outlook for the market is bright, there are some challenges clouding its landscape. “India has a vast coastline, but there is an acute shortage of deep draft water space along the coast,” said Srinath. “This restricts the type and size of ships that can be built or repaired in India, thereby severely curbing the full growth potential of the Indian shipbuilding and repair market.”

Shipbuilding and ship repair are both labor-intensive activities and fulfilling the requirements of this industry is proving to be a market bottleneck.

The Indian Government is encouraging greater private participation in the sector and a new world-class commercial shipyard is being built on the eastern coast. These factors will rev up growth prospects for the market. The Government is also facilitating improvements in port and infrastructure facilities and easing regulations and taxes to assist the industry in addressing the challenges and overcoming its barriers. Participants in this space are striving to gain a foothold in the small and special category vehicles segment, such as offshore vessels to optimize business traction.
 

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