In a significant move aimed at diversifying its portfolio and capturing a larger market share, Kolkata-based Garden Reach Shipbuilders and Engineers (GRSE) has entered into a Memorandum of Understanding (MoU) with Goa's leading business house, DEMPO Group.
The collaboration aims to construct commercial vessels at DEMPO's three premier shipyards located in Goa and Bhavnagar. This is GRSE's first extensive effort to venture into commercial shipbuilding, after pioneering public-private partnerships in the warship building sector in India.
The collaboration model will witness GRSE partnering with V S Dempo Holdings Private Ltd. to share resources for commercial vessel construction. The venture is targeted at both domestic and international markets and comes as India's shipbuilding industry undergoes transformative changes, said a statement.
Indian shipbuilding market
According to recent research, the Indian shipbuilding market is valued at $7.1 billion in 2023 and is expected to grow to $8.76 billion by 2028. Globally, the shipbuilding market is projected to increase from $170 billion to 230 billion by 2028, growing at a compound annual growth rate (CAGR) of 5.45%.
However, the same research indicates that India currently contributes less than 1% to the global commercial shipbuilding sector. This is in sharp contrast to the 3.5% contribution made in 2007.
GRSE aims to break this pattern by leveraging its resources and technological capabilities to compete with countries such as China, Vietnam, and Turkey, particularly for contracts in European, Middle Eastern, and African markets, said the company.
Commodore P R Hari, Chairman and Managing Director, GRSE, acknowledged the global challenges posed by rising competition and stricter environmental regulations. Nonetheless, he expressed optimism about the rapid technological changes occurring in the shipbuilding and repair industry.
Hari highlighted that the location of DEMPO's shipyards would offer a “positional advantage” for shifting vessels to European and Middle Eastern clients, compared to competitors in other countries.
Shipbuilding is one of the highest employment multipliers
Srinivas Dempo, Chairman, DEMPO Group of companies, emphasised the strategic importance of the shipbuilding industry in sectors like energy security, national defense, and heavy engineering. He also pointed out that shipbuilding has one of the highest employment multipliers (6.48) and holds significant potential for job creation in remote, coastal, and rural areas.
Dempo expressed confidence in the “collaborative model's ability to generate a productive ecosystem”. He also drew attention to untapped opportunities in green shipbuilding, an area where both organisations can potentially contribute to environmental sustainability.
The collaboration between GRSE and DEMPO marks an important milestone for India's shipbuilding industry, signaling new opportunities for growth and international competitiveness.
Both entities said that they aim to leverage each other's strengths and resources to create a robust and diversified portfolio, as they look to win more domestic and foreign shipbuilding orders.