How India's plan to build 112 crude oil tankers is a bold move for energy security, self-reliance

India Today

26-05-2025

When the Indian government unveiled its Rs 85,000 crore ($10 billion) plan to build 112 crude oil tankers domestically, it marked a bold foray into industrial renewal, strategic autonomy and maritime ambition. Announced as part of the broader Make in India push, the plan aims to sharply reduce the country's dependence on foreign-owned vessels to transport its most vital import: crude oil.The numbers are striking. India imports more than 85 per cent of its crude oil, yet over 95 per cent of it is ferried by foreign-owned ships. The state-run Shipping Corporation of India (SCI) and a few private operators maintain a limited fleet of tankers—most of them old, foreign-built and increasingly uneconomical to run. As India's refining capacity is projected to expand from 250 million tonnes to 450 million tonnes by 2030, the gap between energy demand and logistical sovereignty has become glaring.advertisementIn response, the government is embarking on a generational project. The first 10 tankers are expected to be ordered shortly. By 2047, the centenary of Indian independence, the goal is for 69 per cent of the country's crude oil fleet to be both Indian-built and Indian-owned. That target, reported in internal planning documents and quoted in the media, reflects a sharp alignment with the government's Viksit Bharat vision. But beyond the strategic clarity lies a hard question: can India build a globally competitive shipping industry from the ground up—on time and on budget?THE CHINESE SHADOWS
To understand the scale of the challenge, one must look east. The global shipbuilding industry is almost entirely monopolised by three countries—China, South Korea and Japan—which together account for over 90 per cent of all commercial ship deliveries. These nations don't just build ships; they command the entire ecosystem: design, materials, propulsion systems, financing and post-delivery servicing. China alone built more than 1,000 ships in 2023 and is doubling down on dual-fuel, low-emission designs that will soon be global regulatory norms.advertisementIn comparison, Indian yards, as such as Cochin Shipyard, L&T's Kattupalli facility and Mazagon Dock, have limited experience with large crude tankers. Most lack the dry-dock depth, assembly automation and robotic welding infrastructure needed to build Very Large Crude Carriers (VLCCs) at scale. Building one or two prototypes is possible; building over 100 over two decades is a different proposition.Worse, Indian shipbuilders are still heavily reliant on imported components: marine-grade steel, turbocharged diesel engines, navigation electronics, and even anchor chains. Much of this is sourced from Chinese suppliers or from Western firms embedded in Chinese supply chains. Unless India establishes a parallel industrial base for marine components—possibly through targeted Production Linked Incentive (PLI) schemes—the ships built here may be 'assembled' rather than truly 'made' in India.Then there's the matter of cost. Indian-built tankers are expected to be 15-25 per cent more expensive than those from China or South Korea. For cash-conscious oil refiners such as Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Limited (HPCL) or Reliance, that cost differential is significant. The government is reportedly working on freight subsidies, tax incentives and guaranteed long-term contracts to make Indian-built vessels commercially viable. Without these, shipyards may build tankers that find no takers.advertisementNAVIGATING STRATEGIC WATERSYet the rationale behind this initiative isn't just economic—it's strategic. India's experience with global freight volatility during the Covid-19 pandemic, the Suez and Red Sea disruptions and tensions in the Strait of Hormuz has underscored a stark truth: logistics is leverage. For a country that depends so heavily on imported oil, not owning the ships that carry it is a structural vulnerability.The government's plan attempts to plug this gap while also reviving the long-dormant commercial shipbuilding sector. If executed well, the project could create 150,000 to 200,000 skilled jobs and catalyse downstream industries worth Rs 2-3 lakh crore. The larger objective is to build a marine industrial ecosystem that spans shipyards, ports, steel plants, electronic component makers and logistics operators.There is, in theory, room to leverage emerging international partnerships. Japan and South Korea, though competitors in shipbuilding, have expressed interest in collaborating on marine technology and skill development under Indo-Pacific cooperation frameworks. The UAE and Saudi Arabia, India's largest crude suppliers, may be willing to co-finance Indian-built tankers or underwrite long-term leases, ensuring steady demand. The India-Middle East-Europe Economic Corridor (IMEEC) and QUAD maritime initiatives offer further possibilities for technology transfers and export credit support.advertisementBut the window may be narrow. China is already transitioning to green shipping technologies—methanol-fueled engines, autonomous navigation systems and carbon-neutral supply chains. Korea is investing in mega yards that produce LNG (liquefied natural gas) and hydrogen-powered ships. India must not only catch up—it must leap ahead.One key risk is execution drift. For this initiative to succeed, India must move beyond procurement headlines and lay the foundation for a modern, resilient and innovation-driven shipbuilding sector. That means building deeper dry docks, introducing robotic production lines, integrating design software from global leaders, and creating world-class training academies for naval architects and marine engineers.Equally important is financing. Building a ship is only half the battle—operating and maintaining it profitably requires a mature shipping finance ecosystem. India lacks a dedicated maritime financing institution, unlike Korea's Exim-backed ship lease model or Japan's structured maritime investment banks. Without accessible, low-interest capital and sovereign-backed guarantees, Indian ship-owners may still prefer the low-risk route of foreign charters.BLUEPRINT FOR SWADESHI FLEETIf India's $10 billion crude tanker programme succeeds, it will mark the return of a strategic capability that was allowed to languish for decades. It would restore confidence in Indian manufacturing, provide maritime muscle to the country's energy security policy, and signal to the world that India is ready to shape—rather than merely sail through—global trade routes.advertisementThe government has launched a shipbuilding renaissance anchored in strategic partnerships and industrial ecosystem building. South Korean shipbuilding giants such as HD Hyundai are investing in Indian infrastructure, including a Rs 10,000 crore mega shipyard in Tamil Nadu, poised to build large crude tankers with cutting-edge technology. Hanwha Ocean is also exploring collaborations, while Japan offers expertise in precision engineering and green technologies through attractive policy incentives.These alliances bring technology transfer, specialised skill development and capital investments that can help Indian shipyards leapfrog initial hurdles. Additionally, states such as Tamil Nadu, Gujarat, and Maharashtra are emerging as maritime industrial hubs, leveraging coastal infrastructure and pro-industry policies.Yet success depends on converting ambition into engineering capability, policy intent into industrial ecosystems, and geopolitical alignment into technological partnerships. It means creating deep dry docks, robotic welding lines, and world-class naval architecture institutes. It means expanding domestic manufacturing of marine-grade steel, engines, and electronics, reducing costly imports.India must also innovate in green shipbuilding, embracing LNG and hydrogen-powered vessels to meet global emission norms. The growing demand for eco-friendly shipping offers an opportunity to future-proof the fleet and capture emerging markets.advertisementAt the same time, developing a robust maritime financing ecosystem is critical. Government-backed maritime investment banks, low-interest credit lines, and long-term charter contracts will be vital to make Indian-built tankers commercially viable and attractive to ship-owners.India's crude oil tanker initiative is not just about ships—it is about reclaiming control over the physical architecture of its 21st-century economic sovereignty. It is about ensuring that the oil powering India's growth moves not just across oceans, but under the Tricolour.If executed with discipline, innovation and strategic foresight, this flagship initiative will revive a dormant shipbuilding sector, create hundreds of thousands of skilled jobs, reduce external vulnerabilities and add a new dimension to India's energy security.The road ahead is fraught with challenges, but the prize—a modern, self-reliant and resilient maritime fleet—could transform India's place in the global energy and shipping order. The question is not just whether India can build these tankers, but whether it can build the vision, partnerships and ecosystems to sustain this fleet through decades of turbulent seas.For now, the government has launched its shipbuilding renaissance with confidence. Whether this fleet will sail or be stranded in the dry docks of missed potential will depend on what comes next.Subscribe to India Today Magazine