Pipavav | An Indian yard’s unlikely bet on cutting-edge shipbuilding

For three decades, India’s shipbuilding industry has largely been a defence industry driven by the government. Commercial newbuilds — tankers, bulkers, gas carriers and container ships that dominate global orderbooks — have gone mostly to China, Japan and South Korea.

There is much talk of change now: Tamil Nadu’s new policy speaks of bringing Ulsan to Thoothukudi, Andhra Pradesh has identified a site for a shipyard of its own, and public-sector yards have been told to chase commercial orders alongside warships. Much of this remains on paper — MoUs and cluster plans still years from steel being cut.

The shipyard at Pipavav, Gujarat, is one of the few places where that gap has narrowed. Built for grand ambitions that collapsed once already, it is now mid-construction on ships no Indian shipbuilder has attempted, and only a handful have taken up anywhere in the world.

The yard’s troubles are well documented. As Reliance Naval and Engineering, it went into insolvency proceedings before the National Company Law Tribunal in January 2020 and sat idle for four years. Swan Corp, a 117-year-old, family-run conglomerate that moved from textiles through real estate, oil and gas, and petrochemicals, won the bid and took possession in January 2024.

The group spent nine to ten months reviving the site — recommissioning machinery, renewing licences and certifications, rebuilding a workforce that had shrunk to around 350 people. Vivek Merchant, director of Swan Defence and Heavy Industries Limited (SDHI), calls it a generational business. Ship repairs came first, deliberately, with the Indian Coast Guard as first client — a defence customer whose presence, Mr. Merchant said, signalled the yard’s systems were genuinely back in order. Only in May-June 2025, 16 months after the acquisition, did SDHI go to market for new construction, having chosen not to fund the revival of order-book cash and wanting everything in place first.

Two contracts, two firsts

That patience produced two contracts marking a departure for Indian shipbuilding. The first, worth $227 million, is with Rederiet Stenersen AS, a family-owned Norwegian shipping company based in Bergen, for six firm and six optional chemical tankers of 18,000 DWT each, built to Ice Class 1A standards with LNG-ready hybrid propulsion — the first chemical-tanker order at an Indian shipyard. The second, worth over $273 million, is India’s first ammonia dual-fuel order: four bulk carriers of 92,500 DWT for Energy ONE Limited, a green-shipping investment fund.

Stenersen had built 14 ships in China before this order. John Stenersen, who runs the company with his brother and is himself a trained, sea-going marine engineer, visited India four or five times during negotiations, walking the yard in overalls and steel-toe boots. Mr. Merchant noted that Stenersen’s ships often sail well beyond the industry’s usual 20-to-25-year recycling threshold — a reputation that counts for as much as the contract itself.

The Energy ONE order arrived differently, with talks dating to 2024, before the Stenersen deal closed. Where an operator takes a hands-on interest in the build, a financial investor, Mr. Merchant said, is usually more inclined to make its money and move on. Yet Energy ONE has appointed its own project managers who engage directly with the classification society, engine makers and designers — a reflection of the stakes riding on the novel ammonia engine, the industry’s big bet for a decarbonised future. Mr. Merchant says he welcomes all hands on deck.

Ammonia as a marine fuel is still embryonic worldwide: fewer than 40 dual-fuel ammonia engines have been ordered globally, and only a handful of ammonia-fuelled ships delivered anywhere, all from East Asian yards. The licensors of these engines are WinGD and MAN Energy Solutions, based in Europe.

To manage the risk, the yard is using customised designs, validated through an Approval in Principle from classification society DNV, since India’s regulatory framework for ammonia propulsion is not yet fully defined. Design work is being handled by international designers experienced with the fuel, not Indian design houses, and the ships will carry an ammonia release mitigation and scrubbing system, double-walled piping, dedicated ventilation, and water curtains.

Pipavav had already built ice-class Panamax bulk carriers for Golden Ocean, the Fredriksen-controlled group, in its earlier avatar. Ice class demands variable steel thickness across the hull, reinforced steering gear and tighter welding tolerances; steel of the required grade is available in India, but the constraint lies further up the value chain. Behind both contracts sits a tie-up SDHI signed with Samsung Heavy Industries last September — a “360-degree backstop,” in Mr. Merchant’s words, on design, project management, training and supply chain.

A government subsidy scheme requires 40% indigenous content on subsidised orders — difficult, Mr. Merchant says, but not impossible. Steel, fasteners, pumps, valves and fit-out are achievable in India; engines, shafting and propellers will remain imports.

There is a manpower story too. SDHI’s headcount, roughly 350 when Swan Corp took over, rose to about 1,200 during the restoration and has settled near 1,000, with talent now approaching the company from across the country, Mr. Merchant said. SDHI has also enrolled around 300 graduate and diploma engineers from local ITIs and polytechnics.

Underneath the technical detail sits a blunter admission: none of this would be commercially viable without State support. Asked whether government backing was decisive, Mr. Merchant did not equivocate — price competitiveness would not have been possible without it, he said, crediting the Ministry of Ports, Shipping & Waterways for levelling the field for Indian yards.

Steel-cutting on the first Stenersen tanker is due between January and March 2027, with first delivery in the last quarter of 2028 and each subsequent ship four months apart. SDHI is building them one at a time, deliberately, to keep capacity free for other orders. The ammonia-engine ships follow a similar sequence from late 2029 — assuming no repeat of the delays that have long marked Indian shipbuilding, which Mr. Merchant attributes, on the defence side, to design philosophies that evolve during construction rather than freezing before steel is cut.

Chinese yards can undercut prices by 20-30%, backed by two decades of State support. India’s countervailing package — a subsidy scheme, credit risk cover, infrastructure status, a Maritime Development Fund, and a policy linking recycling to shipbuilding credit — is recent, still being tested against pricing power China has built over 25 years.

SDHI’s contracts are early signals of what may be possible: that India’s opening in shipbuilding could lie in positioning early for green shipbuilding, a segment set to gain momentum once decarbonisation rules take hold — leaving Indian yards ready when shipowners look for an alternative to China.