India to Invest $10 Billion in Domestic Crude Tanker Fleet by 2040
| 2025-05-21
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India will invest $10 billion to acquire 112 domestically built crude oil tankers by 2040, aiming to boost energy security and reduce reliance on foreign vessels.
India, the world’s third-largest importer of crude oil, is taking significant steps to reduce its dependency on foreign-owned shipping fleets. The government has unveiled a long-term strategy to procure 112 crude oil tankers by 2040, with the ships to be built in India, either independently or in collaboration with international partners.
The plan, led jointly by the Ministry of Petroleum and Natural Gas and the Ministry of Ports, Shipping and Waterways, seeks to gradually expand India’s domestically built tanker fleet. According to government sources cited by The Times of India and Bloomberg, the initiative will begin with an initial order for 10 vessels expected by the end of the month.
In the first phase, 79 tankers will be acquired, including 30 medium-range carriers, at an estimated cost of ₹85,000 crore (approximately $10 billion). The strategy also includes long-term goals to boost the share of Indian-built vessels in the country’s shipping fleet from 5% currently to 7% by 2030, and to a substantial 69% by 2047—the centenary of India’s independence.
Strengthening Local Shipbuilding
The initiative is part of a broader effort to strengthen India’s maritime capabilities and reduce vulnerability to global disruptions in energy transport. In her 2025–26 budget speech, Finance Minister Nirmala Sitharaman announced infrastructure status for large ships, making them eligible for financial incentives under the harmonised master list (HML). This designation is expected to attract private investment in shipbuilding and accelerate fleet modernisation.
To support this vision, the Indian government has also established a ₹25,000 crore Maritime Development Fund (MDF), with up to 49% of the corpus to be contributed by the central government. The remaining funds will be sourced from port authorities, public sector enterprises, financial institutions, and private investors. The MDF aims to provide long-term financing for the acquisition and construction of ships.
Boosting Refining and Strategic Autonomy
The crude tanker procurement plan aligns with India’s broader energy goals, including a planned expansion of refining capacity from 250 million tonnes to 450 million tonnes annually by 2030. This increase is driven by rising domestic demand and export opportunities in petroleum products.
By owning and operating a larger fleet of domestically built ships, India hopes to safeguard its energy trade routes from geopolitical disruptions, including those arising from international sanctions or maritime blockades.
A government official quoted by Bloomberg explained, “The initiative is not just about reducing leasing costs but about securing India’s long-term energy supply and building domestic capabilities.”
India’s Global Maritime Aspirations
India currently controls just 2% of the world’s shipping tonnage and is ranked 22nd in the global shipbuilding industry. However, under its Maritime India Vision 2030 and Amrit Kaal Vision 2047, the government aims to climb into the top 10 by 2030 and reach the top five by 2047.
To facilitate this transition, India is seeking technological collaborations with global shipbuilding leaders. Notably, South Korea’s HD Hyundai Heavy Industries Co. is in discussions with India’s state-owned Cochin Shipyard Ltd. to develop a shipbuilding facility in Kochi, a port city in the southern state of Kerala.
The global shipbuilding sector is currently dominated by China, South Korea, and Japan, which collectively account for over 90% of global production. India’s market, valued at just $90 million in 2022, is projected to reach $8.1 billion by 2033, according to government estimates—a compound annual growth rate of 60%.
Regional Developments and Policy Support
At the state level, measures are also being taken to bolster the maritime sector. In May, the Maharashtra government approved its Shipbuilding, Ship Repair and Ship Recycling Policy 2025, aiming to enhance India’s position in global ship repair and recycling. Maharashtra accounts for 11% of India’s shipbuilding capacity and 21% of its production.
India currently ranks 20th globally in ship repair and second in ship recycling, holding a 32.6% global share in the latter sector.
Context: India’s Energy and Economic Goals
India’s investment in domestically built crude oil tankers is part of a broader ambition to achieve self-reliance—or “Atmanirbhar Bharat”—in critical sectors. As a major oil importer, India spends an estimated $75 billion annually on leasing foreign vessels for crude transportation. By expanding its fleet of locally built ships, the government aims to reduce costs, generate employment, and ensure strategic autonomy in energy logistics.
The policy also supports the national objective of transforming India into a developed economy by 2047. With this investment, India seeks not only to secure its energy supply chain but also to become a leading player in global shipbuilding and maritime trade.
Conclusion
India’s decision to invest $10 billion in a new fleet of domestically built oil tankers marks a pivotal step toward enhancing energy security, expanding industrial capacity, and achieving greater control over its maritime infrastructure. The initiative reflects a comprehensive strategy to meet growing energy demands while positioning India as a significant force in the global maritime economy.
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