DPA Kandla plans a JV route for shipbuilding with GRSE

GANDHIDHAM : The Deendayal Port Authority (DPA) is gearing up for its first decisive venture into shipbuilding — opting for a faster, more viable ₹4,500-crore shipyard at Kandla, in Kutch, Gujarat, instead of the mega project it earlier envisioned.

Though it is keeping alive dreams of developing a sprawling ₹27,000-crore shipbuilding cluster near Kandla, the DPA is now close to forging a joint venture with the Kolkata-based Garden Reach Shipbuilders & Engineers (GRSE).

It had floated an expression of interest (EoI) to develop a smart, automated and environmentally compliant shipyard for building very large crude carriers (VLCCs), very large gas carriers (VLGCs) and Handymax, among other classes of merchant vessels under a JV. It drew interest from GRSE, JM Baxi and Accurate Industrial Controls in partnership with Korea’s Komac Consultants, Sushil Kumar Singh, Chairman of DPA, told businessline. “We are close to finalising a joint venture with GRSE,” he added.

The DPA will hold an equity stake in the venture through contribution of land while the technology and operating partner will bring shipbuilding expertise and capital. Once completed, it will be Gujarat’s 11th shipyard, raising the State’s cumulative shipbuilding capacity to 5.4 lakh dead weight tonnage (DWT).

Among the six shipyards that shut down in Gujarat during the last decade, Pipavav was acquired by Swan Energy and resumed operations in December 2024. ABG’s shipyard units at Magdalla and Dahej and the two State-owned Alcock Ashdown yards at Bhavnagar and Chanch continue to idle.

The proposed shipyard at Kandla will be developed on nearly 120 acres of reclaimed waterfront land within Kandla creek between the existing cargo and oil jetties. “Land reclamation has begun. There were encroachments earlier, which have now been cleared,” Singh said.

According to the EoI, the facility should be able to build and deliver at least two VLCCs or VLGCs, or up to six Handymax vessels annually, with scope for scaling up to accommodate more vessels or offshore structures in the future.

A VLCC-compliant dry dock is a key element of the project and the single-largest cost component. VLCCs are among the world’s biggest ships, often exceeding 300 m in length and 3,00,000 DWT, requiring deep, long and heavily reinforced dry docks. “The shipyard will be able to build about three vessels a year. With GRSE, we also plan to partially manufacture our electric tugs, which we currently source from other companies,” the DPA Chairman said.

Work plan
DPA’s scope of work will include land acquisition, land development and grading, providing the waterfront with the desired depth and creating core civil infrastructure, such as internal and peripheral roads, stormwater drainage, boundary walls and a project office building.

The technology partner’s scope will include the design, construction, execution and operation of the shipyard, including shipbuilding workshops, technical buildings, manufacturing equipment, utilities, launching infrastructure, manpower planning and operational readiness. It will also be responsible for short-, medium- and long-term business planning, as well as laying out a technology roadmap for future scalability. The project will be executed in three phases, with the most capital-intensive component — the VLCC-compliant dry dock — requiring an investment of about ₹1,500 crore, according to an L&T study, Singh said.

After Union Minister of Ports, Shipping and Waterways Sarbananda Sonowal announced in Kandla in January 2025 the proposal for a ₹30,000-crore mega shipbuilding facility, the DPA has been working to transform over 2,000 acres of coastal land at Veera village, near Tuna Tekra in Kutch district, into a world-class shipbuilding cluster. Conceived initially to build up to 50 VLCCs a year, the project went into limbo after the DPA’s tender received a tepid response from global shipbuilders.

Now, officials see the Kandla shipyard project as a pragmatic, fast-track pathway. It is expected to help the DPA build execution capability, develop skilled manpower and de-risk investments, while keeping the larger Veera plan alive for a later stage when market conditions and investor appetites improve.

The Kandla yard is expected to transition to repair and maintenance work once the shipbuilding cluster at Veera becomes a reality, the DPA Chairman said.

Costly capital
According to ICRA, with a market share of 0.06 per cent, India does not feature among the top 15 shipbuilding countries. China, South Korea and Japan are the top three, accounting for 95 per cent of the global shipbuilding industry.

“Shipbuilding demands high working capital… In India, interest rates for these loans are 9-10 per cent, significantly higher than the 4-8 per cent in major shipbuilding nations,” ICRA’s 2025 report stated.

Unlike China, South Korea and Japan, India lacks a well-integrated maritime cluster made up of shipyards, component suppliers and advanced R&D facilities. India’s shipyards are smaller and less automated compared to global leaders, leading to higher production costs and longer construction times.