The Deendayal Port Authority (DPA) is set to make its first concrete foray into shipbuilding with a ₹4,500-crore shipyard at Kandla in Gujarat’s Kutch district, opting for a faster and more viable project instead of the ₹27,000-crore mega shipbuilding cluster it had earlier envisioned.
While keeping alive plans for the larger facility near Veera village, the port authority is close to finalising a joint venture with Kolkata-based Garden Reach Shipbuilders & Engineers (GRSE), according to DPA Chairman Sushil Kumar Singh.
“We are close to finalising a joint venture with GRSE,” Singh told businessline.
The DPA had floated an expression of interest (EoI) to develop a smart, automated and environmentally compliant shipyard capable of building very large crude carriers (VLCCs), very large gas carriers (VLGCs) and Handymax vessels. The EoI drew interest from GRSE, JM Baxi, and Accurate Industrial Controls in partnership with Korea’s Komac Consultants.
Under the proposed structure, DPA will take an equity stake through contribution of land, while the technology and operating partner will bring in shipbuilding expertise and capital. Once operational, the Kandla facility will become Gujarat’s 11th shipyard, taking the State’s cumulative shipbuilding capacity to about 5.4 lakh dead weight tonnage (DWT).
The shipyard will come up on nearly 120 acres of reclaimed waterfront land within Kandla creek, between the existing cargo and oil jetties. “Land reclamation has begun. Earlier encroachments have now been cleared,” Singh said.
As per the EoI, the yard should be capable of delivering at least two VLCCs or VLGCs annually, or up to six Handymax vessels, with provision for future expansion into offshore structures. A VLCC-compliant dry dock — the single largest cost component — will be central to the project. VLCCs, often over 300 metres long and exceeding 300,000 DWT, require deep, long and heavily reinforced dry docks.
“The shipyard will be able to build around three vessels a year. With GRSE, we also plan partial manufacturing of electric tugs, which we currently source from other companies,” the DPA Chairman said.
The project will be executed in three phases. According to an L&T study, the VLCC-compliant dry dock alone will require an investment of around ₹1,500 crore. DPA’s scope includes land acquisition, development and grading, creation of waterfront depth, and core civil infrastructure such as roads, stormwater drainage, boundary walls and project buildings. The technology partner will handle shipyard design, construction, equipment, utilities, manpower planning and operations, along with business and technology roadmaps.
The move follows Union Minister for Ports, Shipping and Waterways Sarbananda Sonowal’s announcement in January 2025 of a proposed ₹30,000-crore mega shipbuilding facility at Kandla. That plan, which envisaged building up to 50 VLCCs annually at a 2,000-acre site near Veera village, stalled after limited response from global shipbuilders.
Officials now see the Kandla shipyard as a pragmatic, fast-track alternative to build execution capability, develop skilled manpower and reduce investment risk, while keeping the larger Veera project alive for a later stage. Once the mega cluster materialises, the Kandla yard is expected to transition largely into ship repair and maintenance.
According to ICRA, India currently accounts for just 0.06 per cent of global shipbuilding, far behind China, South Korea and Japan, which together command 95 per cent of the market. High working capital requirements, elevated interest rates of 9–10 per cent, and the absence of a well-integrated maritime manufacturing ecosystem continue to constrain India’s competitiveness in the sector.
