India, the world’s third-largest importer of crude oil, is taking a bold step toward energy security and self-reliance with a massive $10 billion investment to acquire 112 domestically built crude oil tankers by 2040. This initiative, a cornerstone of the ‘Make in India’ campaign, aims to reduce the nation’s dependence on foreign-owned vessels, which currently dominate its oil transport needs. The move is not just about securing energy supplies but also about building a stronger, self-sufficient India that controls its own maritime destiny.

At present, India’s state-owned oil companies rely heavily on an aging fleet leased from international firms, a practice that limits control and increases costs. The petroleum and shipping ministries are now working together to shift this paradigm by creating a fleet of “built-in-India” oil tankers. This strategic shift is designed to ensure that India’s energy logistics are managed domestically, reducing vulnerabilities in a world where geopolitical tensions and supply chain disruptions are all too common. According to a Bloomberg report, the first phase of this plan involves acquiring 79 tankers, with 30 of them being medium-range vessels. The initial order for 10 tankers is expected to be placed by the end of this month, with a strict condition that only ships built locally—potentially in collaboration with foreign partners—will be considered for purchase.

Beyond strengthening its shipping capabilities, India is also ramping up its crude oil refining capacity. The country plans to increase its annual refining output from 250 million tonnes to 450 million tonnes by 2030, driven by growing domestic and global demand for oil products. A robust, homegrown fleet will ensure a steady flow of crude oil to support this expansion, safeguarding India’s energy trade against disruptions. Currently, “India is working towards increasing the share of locally built crude tankers from 5 per cent to 7 per cent by the year 2030 and to 69% by 2047”, aligning with the nation’s goal to become a developed nation by 2047. This ambitious target underscores India’s commitment to controlling its energy logistics and reducing its reliance on foreign vessels.

The financial stakes are significant. India spends approximately $75 billion annually on leasing ships, yet it controls only 2 percent of the world’s total shipping tonnage. By investing in domestic shipbuilding, the government aims to redirect these funds into its own economy, fostering growth and creating jobs while enhancing energy security. This initiative is a clear signal that India is ready to take charge of its maritime future, ensuring that its critical energy supply chains are not at the mercy of foreign operators.

Modi Government’s Bold Push to Transform India’s Shipbuilding Industry

The Modi government is not just stopping at acquiring tankers; it is laying the foundation for a thriving domestic shipbuilding industry. In a landmark decision, large ships have been granted “infrastructure” status, as announced by Finance Minister Nirmala Sitharaman during her Budget 2025-26 speech on February 1. This inclusion in the harmonized master list (HML) for infrastructure makes shipbuilding eligible for financial incentives, paving the way for private investment and fleet modernization. This move is a game-changer, as it positions shipbuilding as a critical sector for India’s economic growth, much like roads or railways.

To further support this vision, the government has established a Maritime Development Fund (MDF) with a corpus of Rs 25,000 crore. This fund, with up to 49 percent contribution from the Central government and the rest from port authorities, public sector enterprises, financial institutions, and private players, will provide long-term financing for ship acquisition and maritime infrastructure development. The MDF is a strategic tool to boost India’s maritime sector, ensuring that shipyards have the capital needed to compete globally.

The global shipbuilding market, valued at $207.15 billion in 2023 and projected to reach $220.52 billion by 2024 with a 6.5 percent CAGR, is dominated by China (50 percent), Japan (15 percent), and South Korea (28 percent). India’s share, valued at $90 million in 2022, is expected to soar to $8,120 million by 2033, reflecting an impressive 60 percent CAGR. To bridge the gap with global leaders, India is forging strategic partnerships, notably with South Korea’s HD Hyundai Heavy Industries, which is in talks with Cochin Shipyard Ltd. to establish a new facility in Kochi. These collaborations aim to bring advanced technology and expertise to Indian shipyards, boosting their capacity to produce world-class vessels.

India’s ambitions are clear: to climb from its current 22nd rank in global shipbuilding to the top 10 by 2030 and the top five by 2047, as outlined in the Maritime India Vision 2030 and Amrit Kaal Vision 2047. These visions aim to capture a significant share of the global shipbuilding and repair markets. Meanwhile, the Maharashtra government’s Shipbuilding, Ship Repair, and Ship Recycling Policy 2025 is a regional effort to tap into India’s maritime potential. Maharashtra, which accounts for 11 percent of India’s shipbuilding capacity and 21 percent of its production, is poised to lead this transformation. India ranks 20th in ship repair but holds a strong second place in ship recycling with a 32.6 percent global share, showcasing its untapped potential in the maritime sector.

Atmanirbhar Bharat: Building a Stronger, Self-Reliant Nation

The push for domestically built ships is more than an economic strategy; it’s a step toward a stronger, more autonomous India. By prioritizing “built-in-India” tankers, the government aims to bolster maritime and naval capabilities, reducing vulnerabilities to geopolitical disruptions such as blockades or wars. This focus is critical for India, the third-largest oil importer, as it seeks to secure its energy supply chain amid global uncertainties. The plan to increase refining capacity to 450 million tonnes by 2030 will further amplify India’s role in meeting both domestic and international oil demands, making a robust domestic fleet essential.

India’s reliance on foreign vessels has exposed it to risks, such as sanctions on Russian oil shipments or attacks in strategic waterways like the Strait of Hormuz and the Red Sea. By building its own fleet, India aims to “strategically decouple from reliance on foreign powers for critical energy transport services”, ensuring greater control over its logistics. This move also aligns with the broader goal of achieving strategic autonomy in energy logistics, allowing India to navigate volatile global energy markets with confidence.

Beyond security, the economic benefits are immense. Domestic shipbuilding is expected to create thousands of jobs, from skilled engineers to laborers in ancillary industries like steel and electronics. This aligns with the Atmanirbhar Bharat vision, which emphasizes self-reliance and economic growth through indigenous manufacturing. By fostering a robust maritime sector, India is not only securing its energy future but also positioning itself as a competitive player in the global market, ready to take on challenges and seize opportunities in the years ahead.

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