India: 95% of Trade Dependent on Foreign Fleets and the Ambition to Turn the Tide

India's heavy dependence on foreign fleets for international trade is creating a worrying strategic vulnerability. Sounding the alarm at the Raisina Dialogue this past Saturday, Sanjeev Sanyal - Member of the Economic Advisory Council to the Prime Minister of India - pointed out that the current size of the domestic fleet is insufficient to protect the country's economy from global supply chain disruptions or targeted boycotts.

Sounding the Alarm on Reliance on International Carriers

Delving into the core of the issue, Mr. Sanyal explained that the vast majority of India's cargo trade volume currently rests in the hands of international shipping lines, leaving the national economy vulnerable to external pressures. He pointedly stated: "90 to 95 per cent of all our goods trade is carried by foreign ships. So, if you really want to get India into trouble, all you really need to do is to get three or four of the largest shipping lines to boycott India for some reason. And this would really cause serious... severe stress to the Indian economy."

The Tonnage Deficit Dilemma and Northeast Asia's Dominance

The modest size of India's merchant fleet is currently a primary concern. Mr. Sanyal emphasized that the country owns only a fraction of the necessary ocean-going vessels: "India only has 480 functioning, seagoing vessels. I'm not taking fishing trawlers into account, but proper tankers and other things, just 480."

Besides the fleet shortage, he pointed out a massive imbalance in the global shipbuilding industry, where production is almost entirely concentrated in Northeast Asia, while India accounts for a negligible share:  "55 to 60 per cent of all the ships currently under construction or newly constructed were done in... China, another 20 per cent Japan, another 20 per cent South Korea. So if you combine those three countries in Northeast Asia, 95 per cent of all the ships currently under construction are in that one region. Rest of the world combined is 5 per cent, of which we are less than 0.5 per cent."

A Major Policy Overhaul: Ambitions to Become a Global Shipbuilding "Hub"

To turn the tide, the Indian government has initiated a "massive reorientation" of its maritime policy. This process includes a large-scale financial package and the granting of infrastructure status to the sector. Mr. Sanyal stated: "In the last two or three years, we have taken this very, very seriously. We have changed all our shipping, ship flagging and ownership rules just a year ago. We have given a 70,000-crore package for ship building. We have given ships infrastructure status."

Leveraging its steel production capacity, design capabilities, and abundant workforce, India is well-positioned to rise as a global shipbuilding hub. The industry is currently attracting strong international attention: "In the last year and a half, I'm pleased to say we are not only getting Indian orders, we are also getting foreign orders, serious foreign orders. And some of the world's largest shipbuilders like Hyundai, Mitsubishi, etc, they're looking to shift some of their... shipbuilding activities to India."

Maritime Independence: An Urgent Priority on Par with Core Tech

While high-tech sectors often dominate media headlines, Mr. Sanyal firmly asserted that maritime independence must be a top national priority: "People tend to think of all the high-tech stuff, you know, AI and chips and all that. But I would argue that shipbuilding is just as much a big priority area that India is pushing."

Adding to the macroeconomic context at the event, Mehul Pandya, Managing Director and Group CEO of CareEdge Group, highly praised the importance of the summit for broader development: "It's an excellent initiative by ORF. The Raisina Dialogue is one of the premier conferences. There is an intense learning experience. The developments which are taking place are impacting every economy."

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Source: Phaata.com (According to Malaysia Sun)

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