India’s Big Bet: Building Its Own Super Tanker Fleet to Secure Energy Future

Rising global tanker rates and sanctions have increased India’s oil import costs, prompting calls for a homegrown VLCC fleet. The government plans a $10 billion investment to buy and build over 100 tankers by 2040, reducing dependence on foreign vessels. Though challenging, the move could strengthen India’s energy security and boost its shipbuilding industry.

As global shipping costs surge and sanctions reshape crude oil trade routes, India’s heavy reliance on imported oil is once again under the spotlight. With nearly 88% of the country’s oil and over half of its gas requirements sourced from abroad, rising tanker rates are emerging as an expensive challenge that India can no longer ignore.

Rising Freight Rates Add Pressure

Following recent U.S. sanctions on Russian energy giants Lukoil and Rosneft—which curtailed India’s access to discounted Russian crude—oil transport costs have skyrocketed. In September, shipping a standard Very Large Crude Carrier (VLCC) from Saudi Arabia to China cost around USD 87,000 per day. By late October, those rates soared over 40% to USD 125,000 per day—their highest in nearly two years.

Analysts expect freight prices to remain firm. Investment research firm Jefferies predicts average tanker rates of USD 45,000 per day in 2025, climbing to USD 67,500 by 2027. For India, which depends on foreign carriers for most of its crude shipments, that’s a substantial and growing bill.

The question emerging is whether India should develop its own VLCC fleet to reduce foreign dependency and stabilize freight costs.

Why Tanker Rates Are Skyrocketing

Several factors are fueling the export shipping crunch.

• Higher output from Opec+ countries has led to greater oil movement across Asia, tightening demand for large vessels.

  
  

• Western sanctions on Russia and Iran have forced traders to rely on so-called “shadow fleets”—aging ships operating under unclear ownership and regulations—further stretching the availability of reliable tankers.

  
  

According to estimates, the global VLCC fleet stands at just over 800 vessels, leaving little spare capacity when parts of it are tied up in the shadow trade.

India’s Dependence on Foreign Ships

Despite being among the world’s largest energy importers, India owns very few crude oil tankers. Oil marketing companies such as IOCL, BPCL, and HPCL charter foreign vessels, draining billions of dollars annually on freight, insurance, and operational costs.

In 2024–25 alone, India imported around 300 million metric tonnes of crude and petroleum products while exporting about 65 MMT. With refining capacity set to nearly double from 250 to 450 MMT by 2030, this dependence is on track to deepen.

Union Petroleum Minister Hardeep Singh Puri recently pointed out that Indian public sector oil firms have spent USD 8 billion on ship charters in five years—enough to finance a fleet of homegrown VLCCs. Industry experts agree that investing in an Indian fleet could be the most effective long-term strategy to protect the country’s supply chain and reduce volatility in freight costs.

The Push for Self-Reliance at Sea

India’s broader self-reliance initiative—or Atmanirbhar Bharat—is now expanding into the maritime sector. After achieving significant success in mobile phone and electronics manufacturing, the government is setting sights on energy transport autonomy.

Reports suggest that India plans to invest USD 10 billion to acquire over 100 crude carriers by 2040, with a focus on locally built tankers. The target: raise the share of domestic tankers in India’s crude shipments from nearly zero to 7% by 2030, and an ambitious 69% by 2047.

A major step forward came when the Shipping Corporation of India (SCI) signed an MoU with India’s top oil PSUs to jointly own and operate new vessels. SCI will handle operations and regulatory management, while the oil companies will provide cargo and financing support.

Similar collaborations are already underway—ONGC recently joined hands with Japan’s Mitsui OSK Lines to co-develop large ethane carriers, signaling India’s growing seriousness about mastering maritime technologies.

An Opportunity for Indian Shipyards

Building these tankers at home could open up a multimillion-dollar opportunity for Indian shipyards and generate thousands of jobs. Currently, only a handful of global players—major South Korean and Chinese yards—build VLCCs.

India’s Cochin Shipyard, Hindustan Shipyard, and L&T Shipbuilding have the technical foundation to scale up but need substantial modernization and investment. Experts suggest that if Cochin Shipyard can join the league of global VLCC producers, it would be a turning point for India’s shipbuilding ecosystem.

Globally, there are around 900 VLCCs, and few new ones are on order for the coming years. With rising demand and aging fleets, the stage is set for new entrants.

Challenges Ahead

However, the road to energy shipping independence is steep.

VLCCs are massive vessels—over 330 meters long and capable of carrying up to 2 million barrels of oil—and constructing them requires specialized facilities, skilled manpower, and high-grade materials. The largest tanker ever built in India, the MT Maharshi Parashuram (by Cochin Shipyard), measures just 238 meters long, less than two-thirds of a standard VLCC.

Building a supertanker can cost anywhere between USD 50 million and USD 160 million depending on design and environmental compliance standards. Add to that the complex supply chain for components like pumps, gauges, and safety systems, and the scale of investment becomes clearer. Moreover, shipbuilders must now comply with stringent environmental standards to reduce emissions and oil spill risks.

Charting a New Course

Despite the challenges, experts believe the payoff could be transformative. Owning a domestic fleet would not only save the nation billions in freight but also give Indian oil firms the flexibility to control scheduling, routes, and discharge points—something chartered vessels don’t easily permit.

If executed successfully, India’s plan to build and operate its own VLCC fleet could do more than secure its energy corridors—it could establish India as a significant global shipbuilding power, reshaping its position in the world’s energy transport map.