The recent geopolitical conflict has highlighted another vulnerability beyond energy dependence — the near absence of a domestic tanker fleet. Reliance on foreign shipping companies has led to high freight costs, supply chain disruptions, and limited powers in negotiating shipping rates and terms.
To address this gap, the country has begun efforts to strengthen its tanker fleet, with initiatives such as public-private partnerships.
According to Gopal Krishna, former Secretary of the Ministry of Shipping (Ports, Shipping, and Waterways), Government of India, who played a crucial role in the development of the Indian maritime sector, earlier in the government and now as the guiding force behind the Bharat Pravah initiative, “there is a need to look at two critical aspects when trying to understand the issue. One is ship-building and the other is flagging. What is needed is primary focus on ship-building.”
“Even if it is an Indian flag vessel, that is, a vessel registered in the country, it is only 10 per cent of the story. The ship may still be built outside India. Only when the ship is built in India and then flagged in India do we get the full advantage of the logistics and economic value chain. What we have to keep in mind is that ship, unlike other industries, is a moving asset and very international in nature,” he said.
The focus, for India, should therefore be ship-building followed by flagging, he said adding that as far as flagging is concerned “right now the entire industry is dominated by four-five countries.”
In shipping, vessels are broadly classified into two types: Dry cargo vessels and liquid cargo vessels (tankers). “What we are seeing today is need for liquid cargo vessels or tankers mainly for importing crude oil, petroleum products and LPG. To build such tankers is a very costly business, and the product is very price-sensitive, so there are lot of things that need to be considered,” he said.
Hybrid model
Jayaraman Krishnan, partner at S. Natesa Iyer Logistics LLP, said, “India needs to adopt a hybrid model as ship-building requires deep pockets.”
“Unlike China and Korea, India, has not been able to create its own fleet strength mainly because, as a policy, over the years, the government has ended up making Shipping Corporation of India (SCI) a sole monopoly,” he said, adding there has been “no” competition.
SCI monopoly
In fact, the mandate to oil and gas companies is that they can go for other shipping companies only when SCI refuses them, he explained adding “SCI fleet renewable policies were never on time with requirement. Everyone knows that India is heavily dependent on imports to meet its fossil fuel requirements. The decision makers felt that chartering vessels to bring fuel was easier. Besides, Indian shipyards were incapable of building Very Large Crude Carriers.”
Since fuel is very price sensitive, particularly LPG, it was found that chartering vessel to bring fuel was easier.
Vessels’ insurance
Another challenge is insurance for these vessels, he said adding “it is a known fact that success of any insurance industry is re-insurance. Here, we never looked at creating a separate vertical for the purpose.”
The key departments and Ministries are constantly working towards addressing packaging, logistics and shipping challenges amid West Asia conflict.
The Merchant Shipping Act, 2025, has been enacted to modernise the legal framework, improve ease of doing business, and encourage Indian flagging of ships. Indian-flagged vessels are promoted through the Right of First Refusal (RoFR), simplified ship registration, and other regulatory reforms. Shipping vessels, of more than a certain size, have been classified as infrastructure assets to enable easier access to finance.
Reports reveal that South Korean and Chinese shipyards are supported by massive state-backed refund guarantees and low-cost financing.
Indian builders face much higher interest rates and have historically lacked a dedicated maritime financing institution, though the newly created Maritime Development Fund aims to fix this. China has gone for government-built ships, whereas South Korea has a hybrid model.
India’s Maritime Amrit Kaal Vision 2047 aims to increase the country’s shipbuilding capacity and competitiveness, and strategic partnerships with countries like South Korea can play a crucial role in achieving this goal.
Gopal Krishna said he agrees that a South Korea-type hybrid model can work for India in increasing its shipbuilding capacity and competitiveness.
Published on April 16, 2026