Indian Oil Corporation Ltd (IOCL), the largest OMC and refiner in the country, is being considered as the preferred entity for forging the joint-venture with SCI. India, which has never made an oil tanker, currently has less than 1% share of the global shipbuilding market, which is dominated by China, South Korea and Japan.

The move is line with the government’s ‘Atmanirbhar Bharat’ agenda that aims to develop India’s manufacturing sector. It will also ensure energy security as indigenous very large crude containers (VLCCs) or oil tankers would allow India to lower its dependence on foreign ships and insurance entities while reducing the risk of sanctions in war-like situations from impacting operations.

India is the third largest importer of crude oil after the US and China, and the proposal for making oil tankers comes at a time when wars and conflicts have led to persistent supply concerns for oil, resulting in frequent volatility in the energy market. Further, recent Western sanctions on ships carrying Russian oil have also intensified concerns. Russia has emerged as the top supplier of oil to India in the past couple of years catering about 35% of its oil imports. .

Shipbuilding is a key feature of the Centre’s Maritime Indian Vision 2030. The vision document noted that shipbuilding is an industry with a unique feature – it has nearly 65% value addition coming from other technology and ancillary industries such as steel, electronics, engineering, and port infrastructure.

“Being an order-driven industry where each vessel is custom built, building an orderbook is essential for growth and sustenance of the shipbuilding industry. India has demonstrated strong shipbuilding capability in past with several shipyards delivering good quality vessels globally,” it said…The global downturn in the shipbuilding industry significantly impacted Indian shipyards with India’s share in global market declining to less than 1%.

India currently has 28 shipyards, 6 under the Central public sector, 2 under state governments and 20 private sector. Although Indian companies have been in the shipbuilding business, large oil tankers have not yet been manufactured in the country. China, Japan and South Korea are among the top suppliers of VLCCs.

The third person cited above said that as the plan for developing oil tankers is a long-term plan, for the immediate requirements, the state-run refiners are looking at long-term charter of ships. “So far there are only a few ships which have been charter for longer term, but now the focus is having more long charter ships,” the person added.