The newly established ₹25,000 crore Maritime Development Fund (MDF) is set to make its maiden investment by acquiring a 10 per cent stake in a joint venture (JV) company being formed by Shipping Corporation of India Ltd (SCI), Indian Oil Corporation Ltd (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL).
The proposed JV, spearheaded by SCI, aims to acquire and operate a fleet of 59 ships primarily for the transport requirements of the state-owned oil marketing companies (OMCs). The total investment for the fleet acquisition is estimated at ₹15,000 crore over the next five years, according to Capt. B.K. Tyagi, Chairman and Managing Director, SCI.
The venture marks a key step in the government’s efforts to strengthen India’s maritime infrastructure and ship ownership, while creating opportunities for domestic shipyards. The JV company is expected to be formally incorporated by December 2025, Capt. Tyagi told analysts during SCI’s Q2 FY26 results call.
Under the proposed shareholding structure, SCI will hold 50 per cent equity, the three OMCs together will own 40 per cent, and the Maritime Development Fund will take the remaining 10 per cent.
The Union Cabinet had in September approved the creation of the ₹25,000 crore MDF, comprising a ₹20,000 crore Maritime Investment Fund (with 49 per cent government equity) and a ₹5,000 crore Interest Incentivisation Fund offering up to 3 per cent interest support. The MDF follows a blended finance model designed to attract private investment into the maritime sector.
Phased Fleet Expansion
The JV intends to build a diversified fleet that includes very large crude carriers (VLCCs), very large gas carriers (VLGCs), Suezmax and Aframax tankers, medium-range product tankers, and offshore support vessels.
To expedite capacity expansion, the JV will adopt a dual strategy — purchasing second-hand vessels from the market while placing newbuild orders with Indian shipyards. “New vessel ordering and delivery would take three to four years. To quickly increase fleet numbers, we will also buy some second-hand vessels from the market,” Capt. Tyagi said.
The final mix of new and used vessels will be determined after the JV is incorporated. “That breakup is not yet available… Once the JV company is in place, this decision will be taken collectively,” he added.
Revenue and Profitability Outlook
The JV will operate all its vessels through SCI, which will earn a management fee for its services. Vessel acquisition decisions will be guided by financial returns, with an internal rate of return (IRR) benchmark of at least 10–11 per cent.
Capt. Tyagi said the JV expects to generate two to three times the current revenue SCI earns from its existing 58-vessel fleet. “We plan to run the ships with an operating margin of around 50 per cent,” he noted, adding that the newer, more efficient ships will fetch better charter rates.
To ensure long-term stability, the OMCs are expected to provide firm cargo commitments to the JV, with charter hire rates linked to prevailing market indices for crude oil and gas freight. “It will be a very fair pricing mechanism so that there is no issue from any side,” Capt. Tyagi explained.
Funding Model
Under the financing structure, the JV will follow the standard industry practice of 70 per cent debt and 30 per cent equity for ship purchases. SCI’s 50 per cent equity participation is expected to ease its capital requirements, as costs will be shared among the JV partners.
Meanwhile, SCI continues to strengthen its standalone fleet. The company has already added two very large gas carriers (VLGCs) this fiscal and plans to acquire 10–12 more vessels in FY27, Capt. Tyagi confirmed.
