HomeIndustry NewsVizag as Eastern Seaboard’s Ship Repair Hub

Vizag as Eastern Seaboard’s Ship Repair Hub

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The shipbuilding and ship repair sector is probably one of the most underrated sectors in the country. India with a coastline of around 7517 kms is home to 12 major ports and over 200 minor ports.

Maritime transport handles around 70% of India’s trading in value terms.

As per the Shipping ministry Indian owned ships/vessels carried 5.62% of India’s overseas trade during 2020-21. Similarly as per some statistics coastal shipping traffic grew from 74.9 MMTA in 2014 to 133 MMTA in 2022. Sea borne trade in India has grown at twice the global growth rate of 3.3%.

India’s share in global exports increased from 0.8% in 2003 to 1.8% in 2021 (Source: World Trade Statistical Review, 2022).

 ‘The global shipbuilding market is expected to grow at a CAGR of around 3.2% until 2030, whereas the Indian shipbuilding industry is expected to clock 100-125 bps above the global CAGR for the same period’ said Mr Kiran Chonkar, Partner Deal Advisory, BDO India LLP speaking to Vizag Industrial Scan.

Some of the key factors he cited for the promising growth in the global shipbuilding market included GDP growth, improved economic growth, global seaborne trade, increase in demand for cargo transportation through ships, rise in trade-related agreements, technological advancements in marine vessel engines, and the trend of automation in marine transportation, leading to an increase in the demand of large ships and vessels.

Hence with these numbers coupled with GoI’s Atmanirbharta mission the sector depicts a mammoth opportunity that the ship building and ship repair sector throws open to industry.

Andhra Pradesh a Natural Choice

One maritime state which is a natural choice in becoming a ship building and ship repair hub is Andhra Pradesh. Bestowed with a coastline of 973 kms, rapidly growing port and shipping infrastructure, headquarters of the Eastern Naval command and above all the headquarters of the much renowned Hindustan Shipyard Limited co-located with large shipbuilding ancillary industries the state of Andhra Pradesh is probably among the best suited to capitalize on the ship building and ship repair opportunity.

‘Visakhapatnam continues to be a strategic and key centre for shipbuilding and repairs in India’ stated Mr Chonkar.

Albeit the shipbuilding and ship repair industry are two varied verticals both of them offer significant opportunities to industry.

‘‘Ship building and ship repairs are two different verticals demanding two very different sets of requirements. HSL over the years has successfully built over 200 ships and repaired over 2000 ships’ said the Chairman and Managing Director of Hindustan Shipyard Ltd, Cmde Hemant Khatri, IN (Retd.).

India he noted has ambitious plans for port expansion and construction under the Sagarmala Project with a staggering $82Bn investment by 2035. As such about 200 new tugs will be needed by 2032 in line with growing maritime trade and port infrastructure informed the C&MD.

Avenues in Shipbuilding

Some of the other key verticals in the shipbuilding segment include Dregders, Cruise and ferries, green and low carbon shipping, high speed boats, ro-ro service and Ship repairs. Further government initiatives like GTTP (Green Tug Transition Program) which aims at converting 50% of all the Tugs into Green hybrid propulsion Tugs by 2030 and Domestic procurement policy which stipulates that all the service requirement of Tugs for the major ports to be reserved to Indian Built Indian Flag Tugs only for Tugs will provide necessary impetus to ship building / ship repair industry.

Role of MSMEs

What is also encouraging is the lucrative benefits the shipbuilding and ship repair space offers to MSMEs.

‘Both ship building and ship repairs offer enormous opportunities to MSMEs. We at HSL are currently working with about 650 MSMEs and are constantly looking to enhance this number’ said the CMD, HSL. It is stated that HSL procures about 35% from MSMEs which is well above the 25% mandate. In fact just recently it awarded a Rs 165 crore worth order to a private company.

The CMD however urged MSMEs to become more competitive in their quality and pricing and to work on creating a home-grown and identifiable brand.

Huge Order in the Waiting

One of the mighty orders that HSL has been diligently trying to secure is that of the 5 fleet support ships (FSS) for a gargantuan amount of over Rs 22000 crores.

‘This order could well change the fortunes of HSL. It will not only be a huge boost for HSL but will substantially benefit MSMEs too in this region’ said Cmde Khatri.

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