French shipping giant CMA CGM is set to place a landmark $300 million order with Cochin Shipyard Ltd (CSL) to build six LNG-powered 1,700 TEU container vessels, marking the first time an Indian yard will construct container ships of this category. The development began on February 12, when Prime Minister Narendra Modi visited CMA CGM’s headquarters in Marseille and urged Chairman and CEO Rodolphe Saadé to consider India for ship construction, highlighting new incentives and policies supporting the shipbuilding sector. Saadé responded by promising to send a team to explore opportunities in India and consider shifting some of CMA CGM’s internationally flagged ships to the Indian registry. On February 17, Xavier Leclercq, Vice President – Newbuilding at CMA CGM, arrived in Kochi with a clear directive from Saadé to evaluate Cochin Shipyard for a potential order.
Leclercq, who had just toured major shipyards in China and South Korea for larger 18,000 TEU vessel orders, drove straight to Cochin Shipyard upon landing in Kochi. There, he met CSL Chairman and Managing Director Madhu Nair and his team to begin early discussions on an order for container ships, a segment Indian shipyards have never previously built. Despite observing that CSL lagged behind South Korean yards in process efficiency and specialisation, Leclercq was impressed with the technical know-how and the large number of women engineers at the yard, reflecting strong diversity and inclusivity. Insiders said that while there were doubts about CSL’s capabilities, Saadé’s confidence overrode hesitation. “If the Chairman says this has to be done, it will be done,” said a person aware of the matter.
Negotiations between CMA CGM and CSL deepened as both sides saw strategic value in the partnership, eventually agreeing on six ships—more than originally planned. However, progress slowed due to uncertainty around the government’s Shipbuilding Financial Assistance (SBFA) scheme. The existing 14 percent assistance was not enough for CSL to quote competitively against Chinese and Korean yards. CSL chose to wait for clarity on the revamped SBFA 2.0 scheme announced in the February 1 Union Budget. The Cabinet approved the new policy on September 24, and final operational guidelines are being prepared. CMA CGM took the unusual step of working alongside CSL to engage the government and resolve policy concerns, a move that helped keep the deal alive and demonstrated CMA CGM’s commitment to fulfilling the promise made to PM Modi.
CMA CGM and Cochin Shipyard have signed a Letter of Intent (LoI). The final contract is expected within 2–3 months, during which CSL will collect vendor quotes and assess the level of financial assistance under SBFA 2.0, likely to be 20–25 percent for specialised or green vessels. The order carries huge strategic value for CSL, as container ships are complex and LNG propulsion adds further technical challenges. During negotiations, CSL was also in parallel discussions with South Korea’s HD Korea Shipbuilding & Offshore Engineering (Hyundai) for a collaboration. The eventual partnership with Hyundai gave CMA CGM greater confidence in CSL’s capabilities, while CMA CGM’s interest helped shape the Hyundai-CSL tie-up. This collaboration is expected to help build a long-missing shipbuilding ecosystem in India by easing access to engines, parts and suppliers, which are currently imported at high logistics cost.
By ordering six identical ships rather than a single vessel, CMA CGM is enabling CSL to achieve economies of scale, standardise processes and quote more competitively. The first ship will take longer to build, but the remaining five will be delivered faster in six-month intervals, helping CSL integrate into the global supply chain. The government’s decision to extend customs duty exemptions on shipbuilding inputs until 2035 will further reduce costs and improve competitiveness. Industry sources said CMA CGM’s involvement has accelerated engine procurement timelines, as global engine makers prioritise orders backed by major shipowners. CSL, aware of the long-term benefits, adopted a collaborative rather than transactional approach in negotiations, discussing design and technical requirements openly.
CMA CGM’s decision is also driven by strategic diversification. Building in China remains the easiest today, but rising geopolitical risks and US tariffs on China-built vessels have prompted the French carrier to seek alternative shipbuilding geographies. India’s neutral geopolitical position and long-term policy clarity make it an attractive option. Saadé believes India is entering a decisive phase in shipbuilding, similar to how it built a globally competitive automotive industry through foreign partnerships before developing an independent ecosystem. Experts say a vibrant shipbuilding sector could mirror the auto industry’s success, which today contributes 7.1 percent to India’s GDP. Shipbuilding is labour-intensive, and India holds a natural advantage in manpower.
Sources said CMA CGM realised CSL had the technical capability but needed “imagination” to think on a global scale. Helping the yard focus on specialised vessel categories could significantly improve productivity and allow the creation of standard operating procedures, similar to Chinese and South Korean shipyards that specialise in specific vessel types. With container ship orders, CSL can focus on 2–3 vessel categories and exit the current practice of accepting every type of order, which hampers efficiency. Both sides believe this order could open the door for India to become a serious global player in shipbuilding. “Once you taste success, new things will come,” said an industry executive.
