Anchoring Growth: India’s $10 Billion Push for a Self-Reliant Oil Fleet

India has announced a major initiative to enhance its energy security by committing 850 billion rupees ($10 billion) to acquire 112 crude oil tankers by the year 2040. The goal of this initiative is to end the loss of the country's oil supply on foreign-owned ships and facilitate the continued growth of oil demand in India.

 

Currently, the state-owned oil companies operate an aging fleet, with most vessels being chartered from international shipping companies. A portion of the initiative, which is being driven by the ministries of shipping and petroleum, is gearing an outcome to change that. Under the first phase of the plan, the country would acquire 79 ships in total, including 30 medium-range tankers. The first order should take place within the month for 10 tankers.

 

Only ships built in India, either independently or with partnerships from other countries, will have the opportunity to be purchased. This is in alignment with India's pursuit to build a shipbuilding industry in the country. Additionally, India strives to increase the fraction of India-built tankers in the fleet from 5% to 7% by 2030, and then will strive for 69% of all tankers being built in India by 2047.

 

India's crude oil refining capacity is also going to expand quickly during the next decade from around 250 million tons now to 450 million tons, with growth being aided by new domestic and international demand for petroleum products. As the third-largest oil importer in the world, India's investment in a domestic fleet of tankers seems to assist non-dominant cargo shipping in energy safety trade, part of India's ambition to transition to a developed nation by 2047.

 

Source: Bloomberg News