Shipping stocks continued their impressive rally for the second consecutive session on Friday, with Shipping Corporation of India (SCI) rising 16.40% to hit a record high of ₹384.20 per share. In the previous trading day, the stock had touched the upper circuit limit of 20% due to positive developments. This recent rally in the stock has propelled it upturn 40% in 3 sessions and 113% so far in the current year.
Indian Oil Corporation Limited (IOCL), the country’s largest oil marketing company and refiner, is being considered as the preferred partner for this joint initiative with SCI.
India currently accounts for less than 1% of the global shipbuilding market, which is dominated by China, South Korea and Japan, and has never produced an oil tanker before. The proposal is in line with the government’s ‘Atmanirbhar Bharat’ initiative, which aims to boost India’s manufacturing sector and ensure energy security.The development of indigenous very large crude carriers (VLCCs) or oil tankers will reduce dependence on foreign shippers and insurers, thereby reducing the risks of geopolitical tensions affecting oil supply chains.
As the world’s third-largest importer of crude oil after the US and China, India faces persistent supply concerns during conflicts that create volatility in global energy markets.
A recent report by KPMG estimates India’s potential commercial shipbuilding market value at $62 billion by 2047.
Meanwhile, contributing to the rise in shipping stocks, CNBC Awaaz reports indicate that the Maritime Development Fund is set to receive an allocation of ₹15,000 crore to ₹20,000 crore in the upcoming Union Budget on July 23. Green boat scheme announced.
Compared to established regional financial institutions such as the Power Finance Corporation, REC and IRFC, the Maritime Development Fund promises significant regional development.
The potential allocation of funds could be a crucial moment for the shipping sector, which currently faces challenges in accessing adequate financial resources such as bank loans and foreign investments. Despite its important role in promoting projected trade and economic expansion, these limitations persist.
Industry analysts anticipate that the fund will address the substantial funding needs of the maritime sector, facilitating targeted initiatives such as shipbuilding, decarbonization, adoption of green energy technologies, innovation in technology and workforce training and development.