Sanjeev Sanyal, a distinguished member of the Prime Minister's Economic Advisory Council, has identified India's profound reliance on foreign shipping lines for its international trade as a critical strategic vulnerability. In an exclusive interview, Sanyal revealed that more than 90% of India's imports and exports are transported by non-Indian vessels, exposing the nation to significant geopolitical risks and disruptions in global shipping.
India: An 'Island Nation' in Trade
Sanyal emphasized that while India shares land borders with several countries, its trade dynamics position it effectively as an island nation. The vast majority of its trade, especially with major economies like China, is maritime. This heavy dependence means that decisions made by a handful of dominant global shipping companies, or disruptions to key maritime routes, could have immediate and severe repercussions for the Indian economy.
"We don't need sanctions from countries. Three shipping lines decide they don't like us and we would be in deep trouble," Sanyal stated, underscoring the precariousness of the situation.
Global Shipbuilding Dominance and India's Position
The global shipbuilding industry is currently dominated by China, which accounts for approximately 55-60% of all ships built worldwide. Japan and South Korea follow, each contributing roughly 15-20%. The combined share of all other nations is a mere 5%, with India's contribution historically less than 1%. This imbalance not only highlights India's vulnerability but also presents a substantial opportunity for growth and strategic reorientation.
Path to Self-Reliance: Policy Reforms and Investment
Sanyal pointed to recent governmental reforms as a crucial step towards bolstering India's domestic shipbuilding capacity. A significant hurdle has been the lack of long-term financing, as ships have a lifespan of 30-40 years. Historically, the absence of infrastructure status for the shipbuilding sector deterred banks from providing the necessary extended funding.
However, substantial overhauls to regulations governing ship ownership, flagging, and financing over the past two years are beginning to yield results. Indian shipyards, which once struggled, are now reportedly securing large orders, with some having order books extending five to six years into the future.
India's Ingredients for a Shipbuilding Hub
Sanyal believes India possesses all the fundamental elements to become a leading shipbuilding nation:
- Demand: The country's vast trade volume and reliance on foreign ships create a significant domestic market for an Indian-owned and built fleet.
- Steel Production: As the world's second-largest steel producer, India has a critical raw material readily available.
- Engineering Capability: India's proven ability to construct advanced defense platforms, including nuclear submarines and aircraft carriers, demonstrates its technical prowess for commercial vessel manufacturing.
- Labor Force: Shipbuilding is labor-intensive, and India's large, young workforce offers a considerable advantage.
- Strategic Geography: A long coastline provides natural infrastructure for maritime activities.
Aiming for a Top-Four Global Player
The synergy of these factors—policy reforms, improved financing, inherent demand, abundant raw materials, skilled engineering, and a robust labor force—could fundamentally transform India's standing in global shipbuilding. Sanyal noted growing interest from international shipbuilders, including Hyundai and Mitsubishi, as further evidence of this changing landscape.
"I can tell you within five, six years, we will emerge as a serious number four player," Sanyal predicted. The broader objective is not merely to construct ships domestically but to significantly reduce India's dependence on foreign shipping lines, thereby fortifying the nation's economic and geopolitical resilience.