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Ship-building industry feels meltdown pinch...

business Updated: Dec 24, 2008 20:14 IST
HT Correspondent
HT Correspondent
Hindustan Times
Ship-building industry feels meltdown pinch...

The Indian ship-building industry, the fourth largest in the world with a 1.17 per cent market share, has taken a beating in the global meltdown.

There has been a near 15 per cent drop in the total order size of Rs 3,750 crore, with several cancellations marring the sector, which was poised to grow at 3 per cent.

Sector experts say Indian ship-building companies have a distinct advantage over other Asian ship building nations thanks to cheap labour cost, trained manpower and adherence to early delivery schedules.

"It is important to note that the relative impact of slowdown across the shipbuilding countries is likely to be similar; and over the medium-term, the most cost competitive countries will gain share. The challenge for India is to move up the competitiveness curve,” Manish Sharma, Director, with global consultancy firm KPMG told Hindustan Times.

For Indian companies, only 8-10 per cent of the total cost of the ship is labour, while in Europe it is in the 20-23 per cent range.

South Korea, the global leader in shipbuilding, has a 38 per cent market share — but the labour component in its bill works out at a high 19 per cent of the total cost of building a ship.

As India inches towards becoming a leading maritime power, the government has embarked upon an ambitious plan to set up two state-of-the-art ship building yards in the country at a cost of Rs 5,000 crore each.

These would be greenfield yards, one each on the east and west coast. These would have the capacity to build large container ships and tankers up to a capacity of three lakh tonnes, Shipping Minister TR Baalu had said recently.

India has four major ship-building yards at Mazgaon in Mumbai, Kochi in Kerala, Hindustan Shipyard at Visakhapatnam and Hooghly Dock at Kolkata.