India is gearing up to establish a fresh shipping company to amplify its fleet by over 1,000 ships in the next ten years, as it sets its sights on a bigger slice of revenue from burgeoning trade, according to two government insiders. The nation, ranking as Asia’s third-largest economy, is funneling substantial investments into revamping its infrastructure in a bid to ascend to the status of a global manufacturing powerhouse. With Prime Minister Narendra Modi clinching a third term, his aspirations entail India’s transformation into a developed nation by 2047.

The upcoming shipping entity, yet to be christened, will boast joint ownership by state-run enterprises operating in the oil, gas, and fertilizer sectors. These companies are poised to extend substantial business opportunities to the new venture, alongside the state-run Shipping Corporation of India and foreign counterparts. While requests for comments from India’s oil and shipping ministries have gone unanswered, insiders assert that the primary objective is to slash freight expenditures to foreign entities by at least one-third by 2047.

“Current projections suggest that freight expenses could surge to $400 billion as we ramp up both exports and imports by 2047,” disclosed one of the sources, who possesses intimate familiarity with the matter. Shedding light on the existing scenario, the insider revealed that Indian firms shelled out $85 billion in freight costs during the fiscal year 2019/20, with a substantial portion—$75 billion—allocated for the utilization of foreign vessels.

The reliance on foreign carriers has emerged due to India’s shipping fleet failing to keep pace with the escalating trade volumes, encompassing energy imports and exports of refined oil products. The nation currently commands a fleet comprising approximately 1,500 large vessels, spanning tankers, gas carriers, container ships, and dry bulk carriers.

In January, India’s oil and shipping ministries brokered an accord, compelling all state-run oil corporations and the proposed company to collaborate, as per a government document accessed by Reuters. Leveraging the Shipping Corporation of India’s proficiency in tanker acquisition, ownership, operations, and other shipping domains will be pivotal.

A joint working group comprising government and industry stakeholders was convened by the two ministries on May 16 to chart out a roadmap, the document underscored. The forthcoming company is slated to be headquartered at GIFT IFSC, a financial hub situated in Modi’s home state of Gujarat. This locale aspires to rival prominent hubs like Singapore by offering fiscal incentives and a streamlined regulatory framework.

The maiden capital injection will be sourced from a maritime development fund of approximately Rs 30,000 crore ($3.6 billion) envisaged by the government, in collaboration with major port authorities, as per the initial source. To secure low-cost, long-term financing for shipbuilding endeavors, the two ministries advocate for state-run entities to ink 15-year charter agreements with the new company. This marks a departure from the prevalent practice of booking specific voyages or engaging in one- or two-year charters.

“In exchange, state-run corporations can also acquire stakes in the new ship-owning and leasing entity,” the insider elaborated. “The overarching plan is to consolidate the government’s cargo demand from other ministries, primarily pertaining to energy and fertilizer cargoes.”