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The Indian shipbuilding and repair market is estimated to double from its 2010 revenue of $1.6 billion in the next five years.
The primary driver of this growth will be increasing penetration of Indian shipbuilders and repairers in the offshore supply vessels (OSVs) segment. “Indian companies have established strong credentials in the building and repair of OSVs, resulting in a spike in orders for such vessels. The limited capacities in the OSV segment in leading shipbuilding nations such as Japan and South Korea are resulting in diversion of orders to India, driving up the fortunes of Indian shipbuilders,” a recent study by Frost & Sullivan says.
Other factors like the ageing fleet of shipping companies in India are also broadening the scope for Indian shipbuilding companies. Analysts say that about 40 per cent of the Indian fleet is more than 20 years old and ship owners will need to pump in $4 billion to replace this fleet in the next four to five years.
The growth potential is further enhanced with the Government aiming for the country's shipbuilding sector to capture a five per cent share in the global market by 2017.
High throughput
The need for new supplies will also increase as Indian ports are gearing up to handle 1,373 million tonnes of throughput by 2015, with a CAGR growth of 7.6 per in the next four years. Plans are afoot to build a world-class commercial shipyard on the eastern coast.
India currently has a mere one per cent share in the global shipbuilding and repair market, estimated at $160 billion, with South Korea, China and Japan leading with a share of 36 per cent, 32 per cent and 23 per cent respectively. While there are eight PSU shipbuilding yards, including Hindustan Shipyard and Cochin shipyard, the private sector has 21, with ABG Shipyard, Bharati, Pipavav, Tebma and Chowgule being the leaders.
Geographical constraint
Although the outlook for this sector is bright, industry analysts say that there are some challenges that players in this segment should surmount. “India has a vast coastline, but there is an acute shortage of deep draft water space along the coast. This restricts the type and size of ships that can be built or repaired, which is stemming the full growth potential,” says Mr Srinath Manda, analyst with Frost & Sullivan.
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