India-Sri Lanka shipyard tie-up carries geopolitical weight

LAST Friday’s India-Sri Lanka shipyard tie-up announcement, though modest in scale, came at an interesting time.

The acquisition of a majority stake in Colombo Dockyard proposed by state-owned Mazagon Dock Limited was valued at only around half a million US dollars. Globally, both firms remain insignificant players in the sector.

While MDL constructs warships for India and Colombo Dockyard is Sri Lanka’s largest builder, neither possesses an orderbook large enough to rank within Clarksons’ top 150 global shipyards. India’s only listed yards — Cochin Shipyard and Chowgule — place at 109 and 140 respectively.

As of early June, India’s orderbook stood at just 600,000 cgt, accounting for less than 0.4% of the global share. By comparison, top-ranked China holds 59%, followed by South Korea’s 22% and Japan’s approximately 8%.

According to company profiles, the largest cargoships built by both MDL and Colombo Dockyard appear not to exceed 10,000 dwt — considered small tonnage in modern merchant shipping.

Nevertheless, the acquisition merits attention given the broader trend it may represent.

“This marks MDL’s first international acquisition and signals a clear strategic push by India to expand its shipbuilding footprint beyond domestic borders,” said Xclusiv Shipbrokers analyst Dimitris Roumeliotis.

Despite the significant gap, New Delhi — aspiring to become a new “world factory” — has not been shy of its goal of becoming a global player in shipbuilding for both commercial and defence purposes.

The China-US rivalry provides geopolitical tailwinds accelerating this agenda.

Washington’s port fees targeting China-owned/ built ships create opportunities for their competitors, with India’s extensive coastline and labour force seen as untapped potential.

As US allies, South Korea and India are reportedly converging: HD Hyundai and Cochin Shipyard are considering more than $1bn investment in a new “mega” facility in Tamil Nadu.

Meanwhile, the Indian government was said to be planning $10bn to develop a home-built fleet of more than 100 oil tankers by 2040, potentially involving foreign collaboration.

Colombo Dockyard is currently controlled by Japan’s Onomichi Dockyard that specialises in handysize bulkers and product tankers.

MDL could potentially integrate Japanese craftsmanship to narrow technological and operational efficiency gaps.

More crucially, Colombo Dockyard’s geographical location offers strategic value. Proximity to key shipping lanes provides MDL with greater commercial opportunities while giving India a valuable regional base in the Indian Ocean.

“It’s a smart way for India to accelerate its shipbuilding ambitions, especially against dominant Chinese yards,” said Roumeliotis. “Additionally, this aligns with India’s broader ocean strategy, including naval bases, port development and regional partnerships to counterbalance China’s Belt and Road footprint.”

Today, geopolitical shifts often dictate daily shipping market movements, though its reshaping of the shipbuilding landscape will likely require more time. This deal may mark a notable step forward.

Lloyd's List Daily Briefing 01 July 2025

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