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Picture Courtesy: The Hindu

Context:

The Government of India has announced a major revival plan for the State-owned Shipping Corporation of India (SCI), proposing to acquire 200+ merchant vessels across categories through joint ventures (JVs) with other Public Sector Undertakings (PSUs).

Evolution of Shipping corporation in India (SCI):

Foundation

The Shipping Corporation of India was established as India’s national carrier with the objective of building an indigenous maritime capability. Over the decades, it expanded rapidly, becoming one of the world’s respected state-owned shipping companies.

Emergence as a pillar of India’s maritime ecosystem

SCI soon became synonymous with India’s maritime aspirations and capabilities.

• It combined commercial operations with national service obligations.
• Its fleet strength crossed 120 vessels, making it one of the largest Asian shipowners of its time.
• It frequently operated in challenging conditions and undertook missions of national importance, cementing its strategic role in the country’s logistics and energy security. 

Technological advancement

SCI led technological modernisation in Indian shipping:

• It inducted state-of-the-art European marine engines soon after global launch.
• It operated India’s first-ever LNG carrier, marking a major technological leap.
• It placed orders in Indian shipyards despite cost escalations, supporting the domestic shipbuilding ecosystem.

National service role

SCI’s role went far beyond commercial shipping:

• It traditionally held first rights on transporting India’s crude oil imports, forming the backbone of the country’s energy logistics.
• It transported civilian workers to Andaman & Nicobar Islands at concessional rates.
• During high-risk situations such as the Iran–Iraq conflict, SCI ships prominently displayed INDIA to signal neutrality for safe passage.
• Its training institute in Mumbai (Powai) produced thousands of seafarers who later contributed significantly to foreign exchange earnings through global employment.

Decline in the Liberalisation era

The 1990s marked a turning point. As India implemented Liberalisation-Privatisation-Globalisation (LPG) reforms and aligned with WTO–GATS obligations:

• Preferential rights for SCI over EXIM cargo were diluted.
• The profitable “right of refusal” for oil cargo carriage was removed.
• Fleet modernisation slowed drastically—only two vessels were ordered in an entire decade.
• Tanker strength collapsed and the average fleet age rose to 18 years, nearing obsolescence.
• Relaxation of cabotage rules weakened Indian container shipping, causing domestic operators to lose market share.

Contemporary revival efforts

Recognising SCI’s importance, the government has initiated a major revival strategy:

• Acquisition of 200+ ships through joint ventures with PSUs.
• Long-term cargo support from partners like CONCOR and oil companies.
• Creation of Bharat Shipping Line to rebuild India’s container shipping footprint.
• Phased expansion aligned with high global shipbuilding costs.

What are the global policy trends supports strategic public ownership?

Reversal of the post–cold war “Free Market Consensus”: For nearly three decades after the 1990s, global economic policy emphasised deregulation, privatisation, and minimal state involvement. However, successive crises—financial shocks, geopolitical tensions, pandemics, and supply-chain disruptions—have revealed the limitations of an entirely market-driven model. 

State Role in Industrial Policy: Countries are increasingly viewing certain industries—technology, logistics, minerals, food systems, and energy—as “strategic assets” requiring direct government involvement. 

What are the roles that SCI is going to perform in national development?

Strengthening economic growth and industrialisation: National development depends heavily on building a resilient economic base, and strategic public institutions such as the Shipping Corporation of India contribute to this by enabling efficient movement of energy, raw materials and finished goods.

Ensuring energy and supply-chain security: Shipping, transport and logistics play a central role in securing uninterrupted access to essential imports such as crude oil, LNG, fertilizers and machinery. By maintaining dedicated fleets and reliable transport channels, national carriers help protect the country from external shocks, geopolitical tensions and sudden market disruptions

Promoting regional connectivity and social inclusion: National enterprises often undertake non-commercial responsibilities that support remote and underserved regions. Through subsidised services, passenger transport and supply delivery to islands or difficult terrains, they strengthen territorial integration, improve access to essential goods, and ensure that development benefits reach all parts of the country, not just economically strong regions.

Developing skilled human resources: Public institutions contribute significantly to human capital development by offering specialised training, technical education, and professional certification. In the maritime sector, dedicated training academies produce skilled seafarers, engineers and technicians who support global shipping networks and generate substantial foreign exchange, thereby expanding India’s talent pool and enhancing its competitiveness.

What are the challenges that SCI going to face?

Ageing Fleet: A critical challenge for India’s national shipping capacity has been the ageing profile of vessels, particularly within the Shipping Corporation of India (SCI). The average age of an SCI vessel is around 18 years, very close to the 20-year scrapping threshold whereas countries like Japan and South Korea maintain average fleet ages of 8–12 years.

Erosion of India’s Share in Export Import Cargo: India’s shipping sector has struggled to retain market share in the transport of its own export–import cargo. Indian-flagged ships today carry only about 7% of India’s EXIM trade, a significant fall from nearly 27% in the early 1990s.

Limited Access to Long-Term Finance: Building modern ships is capital-intensive, and Indian shipping companies face higher financing costs than global competitors.

Inadequate domestic shipbuilding capacity: Indian shipyards are often criticised for long construction timelines and cost overruns, limiting their competitiveness. While Cochin Shipyard’s production quality is globally recognised, construction of large vessels often faces delays of several months to years, reducing India’s ability to modernise its fleet at the pace required.

Conclusion:

India’s experience shows that a strong national shipping capacity is essential not only for trade efficiency but also for energy security, strategic resilience and economic stability. The decline of Indian-flagged vessels and overdependence on foreign carriers exposed critical vulnerabilities, especially during global disruptions like COVID-19. The revival of SCI and renewed state participation reflect a broader recognition that key logistics sectors cannot be left entirely to market forces. Strengthening domestic fleet capacity, supporting private players and modernising shipbuilding are therefore crucial for building a resilient maritime ecosystem that safeguards India’s long-term national interests.

Source: The Hindu