Indian Oil Corporation (IOC) is expected to place an order for at least 10 medium-range oil tankers from a joint venture led by the Shipping Corporation of India (SCI), with the vessels to be constructed at an Indian shipyard, sources said.

As the world’s third-largest oil importer and consumer, India relies heavily on hired vessels to transport energy supplies. The government has been keen to secure energy supply lines, prompting IOC and other state-owned oil firms to explore building ships domestically, which would also generate employment.

Earlier proposals to establish a shipping company in India were delayed due to a lack of domestic shipbuilding expertise. The availability of cheaper Chinese-built vessels added to the hesitation, though the government emphasised the strategic importance of indigenously built ships.

IOC initially considered a three-way joint venture involving a foreign shipyard with vessel-building expertise and a shipping operator. The company has now opted to procure 10 Aframax tankers, with capacities between 80,000 and 120,000 deadweight tonnes, through a joint venture with SCI and an Indian shipyard, possibly Cochin Shipyard. Other oil companies may follow suit.

The order announcement is expected to coincide with Prime Minister Narendra Modi’s September 20 launch of India’s global shipbuilding bid from Bhavnagar, Gujarat. Announcements may include a revamped Ship Building Financial Assistance (SBFA) scheme and a Rs 25,000 crore Maritime Development Fund (MDF). A Rs 20,000 crore plan to set up shipbuilding clusters in Gujarat, Andhra Pradesh, Odisha, and Maharashtra is also under consideration.

Sources estimate Indian oil companies will need 112 crude carriers by 2040 to replace the ageing fleet, most of which are currently chartered from foreign firms. Over 85 per cent of the USD 100 billion spent by Indian companies on freight costs in recent years went to foreign vessels.

The first phase of the domestic shipbuilding programme will involve procuring 79 vessels, including 30 medium-range tankers. The plan aims to raise the share of locally built tankers in the fleet to 7 per cent by 2030 from 5 per cent currently, and to 70 per cent by 2047.

SCI will operate the domestic fleet, while state-owned oil companies will provide orders to Indian shipyards. International players, including South Korea’s HD Hyundai Heavy Industries and Samsung Heavy Industries, as well as Japan’s Mitsui OSK Line and Nippon Yusen KK (NYK Line), have expressed interest in partnering with Indian yards such as Cochin Shipyard.