Some wind behind the sails of India’s shipping industry Premium

Despite high economic growth and increased investments in the maritime sector, the Indian shipping industry has remained stagnant

The government deserves credit for its commitment to develop the maritime sector, largely neglected by predecessor governments. This is reflected in the expenditure on the government’s flagship programme, Sagarmala, which, as on September 2024, had outlined 839 projects requiring an investment of ₹5.8 lakh crore by 2035. Of these, 241 projects, worth ₹1.22 lakh crore, have been completed, while 234 projects, valued at ₹1.8 lakh crore, are under implementation. Additionally, 364 projects, with an estimated investment of ₹2.78 lakh crore, are in various stages of development.

Within Sagarmala, ₹2.91 lakh crore (over 50%) is allocated for port modernisation; ₹2.06 lakh crore (more than 35%) for port connectivity; ₹55.8 thousand crore (10%) for port-led industrialisation, the remaining 5% distributed between coastal community development, infrastructure for coastal shipping (not ship acquisition) and inland water transport.

India’s economy has seen GDP rising from ₹153 trillion in 2016-17 to ₹272 trillion in 2022-23 — an increase of 43%, growing at a CAGR of 7%, despite two years of COVID-19 related setbacks. The economy is projected to reach $3.7 trillion this year, $5 trillion by 2027, and $7 trillion by 2030.

During this period, India’s EXIM trade has also grown from $66 billion in 2016-17 to $116 billion in 2022, a cumulative increase of over 77% and an annual growth rate of 12.83%. India aims to boost exports to $2 trillion by 2030, to strengthen its global trade position.

Despite high economic growth and increased investments in the maritime sector, the Indian shipping industry has remained stagnant. According to statistics by the Ministry of Ports, Shipping and Waterways, the cargo handled at major ports has only marginally increased from 1,071.76 million tons in 2016-17 to 1,249.99 million tons in 2020-21 — a cumulative growth of 14.26% or an annual increase of just 2.85%. In contrast, the number of vessels handled at these ports has actually declined by 5.93%, from 21,655 vessels in 2016-17 to 20,371 in 2020-21.

In terms of Indian-registered ships, the number has increased from 1,313 in 2016-17 to 1,526 in September 2024 — a cumulative rise of 16.77% and an average annual growth of 2.4%. Over the same period, gross tonnage has grown from 11,547,576 GT in 2016-17 to 13,744,897 GT — a cumulative increase of 17.44% and an annual average growth of 2.5%.

A major concern has been the aging Indian fleet, with the average vessel age rising to 26 years in 2022-23. However, this has now improved to 21 years, with the addition of 34 relatively younger vessels (average age of 14 years) in 2024. In comparative terms, India’s global ranking in ship ownership declined from 17 to 19, highlighting the need for reforms.