India May Drop Experience Rule to Let Local Shipyards Bid on Large Vessels

India may lift restrictions on local shipbuilders bidding for state contracts to make container ships and oil tankers to help them compete with Korean and Chinese yards, an official with direct knowledge of the matter said.

The shipping ministry wants to drop a clause that requires yards to have prior experience building large vessels, the official said today, asking not to be identified as the matter is confidential. Indian shipbuilders may be selected if their bid is within 15 percent of the lowest offer, the official said, citing a note circulated to the cabinet.

The proposal is likely to be cleared by cabinet ministers in six weeks, the official said. Maushumi Chakravarty, spokeswoman for the shipping ministry, declined to comment.

The proposals could help local shipbuilders such as Bharati Shipyard Ltd. and ABG Shipyard Ltd. compete internationally by letting them gain experience of building larger vessels. State- controlled Shipping Corp. of India Ltd. may order vessels worth as much as $8 billion over five years as it doubles capacity, according to Mantrana Maritime Advisory Pvt.

ABG Shipyard climbed 4.6 percent to 474.8 rupees in Mumbai trading, compared with a 1.6 percent gain in the benchmark Sensitive Index. Bharati rose 1.2 percent to 267.65 rupees and Pipavav Shipyard Ltd., India’s biggest shipbuilder by market value, climbed 1.4 percent to 89.25 rupees.

“If you have delivered one large ship, then there is a track record,” said Anand Sharma, a director at the Mumbai- based industry consultant. “These firms can then go to the market and seek more business.”

Shipbuilding Growth

Prime Minister Manmohan Singh’s government is keen to develop shipbuilding to pare reliance on overseas suppliers and to help grow exports. The nation wants to raise its share of the global shipbuilding market to 5 percent from 1.25 percent by 2017, Shipping Secretary K. Mohandas said on Sept 28.

Shipping Corp., the nation’s largest sea-cargo carrier, operated 80 vessels at the end of March. The Mumbai-based company has previously ordered ships from yards including South Korea’s Hyundai Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. and China’s Jinling Shipyard, according to its website.

The shipping line is set to order new vessels as world trade rebounds from last year’s global recession. Global trade volumes will rise 9 percent this year and 6.3 percent in 2011, according to estimates by the Washington-based International Monetary Fund. They shrank 11.3 percent last year.

India’s economy, Asia’s third-largest after Japan and China, has averaged 8.5 percent growth over the past five years. That’s helped the country double its share of world trade to 1.5 percent, according to the nation’s trade ministry.