India plans 100 vessels to reduce its dependence on foreign lines

India is looking to add 100 vessels to its merchant fleet over the next five years as part of efforts to reduce its dependence on foreign shipping lines and retain more of the country’s freight expenditure within the domestic maritime sector. The proposal was highlighted at the inaugural ‘Sagar Samvad’ organised by the National Shipping Board (NSB) in Delhi on August 25, where policymakers and industry stakeholders discussed ways to strengthen India’s shipping capacity.

Union Minister of State for Ports, Shipping and Waterways Shantanu Thakur said India currently pays close to $75 billion annually in freight to foreign shipping lines for transporting critical cargo such as crude oil, gas, coal and urea. The NSB-backed roadmap aims to strengthen Indian ship ownership and increase the availability of Indian-flagged vessels for domestic and international cargo movements.

Indian-flagged ships face cost disadvantage
Industry representatives at the event said operating vessels under the Indian flag remains 16% to 20% more expensive than operating under foreign flags. The cost disadvantage was attributed to factors including taxes on ship imports and maintenance services, taxation of seafarer wages and freight, as well as higher domestic financing costs.

The industry also highlighted a challenge under India's Right of First Refusal mechanism. Indian shipowners may have an opportunity to carry certain cargo, but they still need to match foreign freight rates, limiting their competitiveness.

Five-point roadmap for fleet expansion
The NSB panel proposed five key measures to make Indian shipping more competitive:

1. Fiscal reforms

2. Assured cargo support

3. Competitive financing

4. Regulatory streamlining

5. Improved ease of doing business

The measures are intended to encourage investment in Indian-flagged vessels and help the country expand its cargo-carrying capacity. The proposed addition of 100 vessels would also support India's longer-term ambition of becoming one of the world's top five ship-owning nations by 2047.

Focus on India's freight dependence
The fleet expansion comes as India continues to handle rapidly growing international trade through its ports while relying heavily on foreign-owned and foreign-flagged vessels to move cargo. The government is simultaneously expanding port capacity, with the Union Minister of Ports, Shipping and Waterways Sarbananda Sonowal stating that India is targeting port capacity of 10,000 million tonnes a year by 2047.

The NSB argues that expanding Indian tonnage is critical to ensuring that growth in port and cargo volumes also translates into greater participation by Indian shipowners. The broader objective is to build a more competitive domestic shipping ecosystem capable of carrying a larger share of India's crude oil, coal, gas, fertilisers, containers and other international cargo.

The inaugural Sagar Samvad therefore placed cargo-carrying capacity at the centre of India's maritime strategy, with the proposed 100-vessel expansion positioned as a step towards reducing the country's dependence on foreign shipping and strengthening its control over international trade flows.