India is seeking to realize the ‘Maruti Moment’ in the far ocean.
According to a report by the Indian media "Economic Times" on September 28, India announced a plan totaling 700 billion rupees (about 56 billion yuan) earlier this week, aiming to replicate the revolutionary wave triggered by the joint venture Maruti Suzuki in the automobile industry in the 1980s by revitalizing domestic shipyards and the wider maritime ecosystem.
It is that the plan includes the establishment of a maritime development fund and an upgraded shipbuilding subsidy scheme, while inviting South Korean and Japanese shipbuilders to set up factories independently in India or to cooperate with local shipbuilders. In the current context, the strategic initiative is significant, as about 95 percent of India’s import and export trade depends on foreign shipping. TK Ramachandran, Secretary of India’s Ministry of Ports, Shipping and Water Transport, said: “With this new scheme, it’s like a ‘Marti Moment’ for the shipbuilding industry.”
“But we have to create a huge demand for domestic ships in order for these incentives to work,” he added, adding that India spends about $75 billion a year renting foreign ships to transport global trade goods — a figure that could bounce to $400 billion by 2047 if no action is taken, and experts stressed that building a strong domestic fleet is critical.
The so-called “Moment of Maruti” is a metaphoric use in the field of business and economics, which is derived from the historical events of the Indian automotive industry, and is used to describe a key moment in which a market is facing a thorough clearance and drastic change due to the introduction of powerful external competitors, revolutionary technologies or disruptive business models.
In 1983, the Indian government and Japan's Suzuki jointly established Maruti Suzuki and launched the Maruti 800, a small car. This car completely subverted the Indian automobile market with its modern design, reliable quality, excellent fuel economy and affordable price.
Regarding this move in the field of shipbuilding today, M Angamuthu, chairman of the Mumbai Port Authority, said that it is a strategic necessity for the country to maintain long-term maritime security and economic resilience. He added that India's over-reliance on foreign vessels is particularly vulnerable in times of global turmoil, such as pandemics, wars or sanctions.
"A strong Indian fleet is essential to ensure continuity of key supply chains and national sovereign control." He said India currently has only 1,500 vessels, of which only about 220 are used for import and export trade, while there are just over a dozen shipyards capable of producing ocean-going vessels, accounting for less than 1% of the global shipbuilding industry.
By contrast, China's market share is as high as 70%, followed by South Korea and Japan, the Economic Times said. For his part, Ramachandran said that the Indian government has been approaching a number of Korean and Japanese companies, and some of these shipbuilders are operating at full capacity.
"Their orders are already scheduled until 2028 or even 2029, so alternative shipbuilding locations are being sought. With this incentive scheme, Indian is well positioned to attract them." Ramachandran said Korean shipbuilders include Samsung Heavy Industries, Hyundai Heavy Industries, Hanwha Marine and HD Korea Shipbuilding, while well-known Japanese players such as Mitsubishi, Hitachi and Kawasaki are also involved in shipbuilding.
Madhu S Nair, chairman and general manager of India’s largest shipbuilding company, said the company had talks with Modern Heavy Industries, while another Indian company was in talks with Samsung Heavy Industries, adding that South Korea and Japan’s shipbuilding giants sought a “long-term partnership” and that a simple incentive program was not enough to meet their needs.
“First, it would require guaranteed orders for about 100 new vessels from Indian Oil and Gas Corporation (ONGC), Indian Gas Corporation (GAIL) and other fertilizer and coal companies, such a demand would guarantee buffering for any new cooperation, after all, in the cyclically very strong shipbuilding industry, no one is willing to fall on the hard ground (i.e. fall into trouble).”
The world’s leading shipping journal, Lloyd’s List, has previously argued that India, with a wealth of labor resources, is likely to shake the positions of China, South Korea and Japan as the three largest shipbuilding powers.
“The three major shipbuilding powers, which account for more than 90 percent of the global shipbuilding market – China, South Korea and Japan – are all facing the common problem of aging productive labor force. Japan and South Korea are already in trouble with aging populations, and China will quickly face the same situation.
However, industry views generally believe that the development of the Indian shipbuilding industry can be supported by the entire industrial chain ecosystem, which includes both the materials and equipment needed for shipbuilding and the supporting services such as ship repair, maintenance and major repair (MRO). If the focus is on funding to modernize the infrastructure or simply supplement young labor, it is not enough to give India real control of the entire supply chain of the shipbuilding industry. Building a supply chain system covering all aspects of equipment manufacturing, phased construction, ship assembly and even advanced shipbuilding technology development is destined to be a long and complex process.
The report also pointed out that “in the shipbuilding industry, facility construction and human resources supply are not the only important factors, and the overall ecosystem that supports shipbuilding should now be prioritized to improve.”
It is worth noting that, in addition to India's start to keep a close eye on the shipbuilding industry, the United States is also trying to woo allies to join hands to "check and balance" China in the face of China's far-ahead shipbuilding industry, vowing to "revive the American shipbuilding industry."
The Associated Press on August 17 that two U.S. congressmen, using the opportunity to visit South Korea and Japan, sought to use allied shipbuilding technology and production capabilities to boost U.S. shipbuilding capabilities to cope with the situation far behind China.
Tammy Duckworth, an Illinois Democratic federal senator, and Andy Kim, a New Jersey Democratic federal senator, arrived in South Korea on the same day and planned to travel to Japan. They intended to meet with senior leaders of major shipbuilders in the world’s second and third largest shipbuilders to explore the possibility of establishing a joint venture, building andining non-combat vessels for the U.S. Navy in the “Indo-Pacific” region, and pushing them to invest in U.S. shipyards.
“The U.S. shipbuilding industry has declined, while China’s shipbuilding industry is on the run.” The British Economist earlier that at the end of the 1990s, China accounted for only 5 percent of the world’s merchant ship production, now more than 50 percent, stable in the world, while the U.S. accounted for only 0.1 percent. In naval shipbuilding, China’s production capacity is 230 times that of the U.S., China’s naval ship number is already at the top in the world, and the size of the U.S. fleet has halved since the end of the Cold War.