Maritime Development Fund to Make First Investment in SCI-Led ₹15,000 Crore Shipping JV

By Admin

12 Nov, 2025

In a landmark move for India’s maritime industry, the newly established ₹25,000 crore Maritime Development Fund (MDF) is set to make its first investment by acquiring a 10% stake in a strategic joint venture (JV) spearheaded by the Shipping Corporation of India Ltd (SCI). This ambitious JV, with participation from Indian Oil Corporation Ltd (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), is designed to bolster India’s ship ownership and maritime infrastructure capabilities.

Strengthening India’s Shipping Backbone

The proposed JV plans to acquire and operate a fleet of 59 ships, primarily serving the transportation requirements of state-owned oil marketing companies (OMCs). According to Capt. B.K. Tyagi, Chairman and Managing Director of SCI, the total investment for the fleet expansion is estimated at ₹15,000 crore over the next five years. The company is expected to be formally incorporated by December 2025, marking a major milestone in India’s maritime growth journey.

Under the proposed shareholding structure, SCI will hold 50% equity, the three OMCs will collectively own 40%, and the Maritime Development Fund will retain the remaining 10% stake.

What is the Maritime Development Fund (MDF)?

Approved by the Union Cabinet in September, the ₹25,000 crore MDF comprises two major components   a ₹20,000 crore Maritime Investment Fund (with 49% government equity) and a ₹5,000 crore Interest Incentivisation Fund, which provides up to 3% interest support. The MDF follows a blended finance model aimed at attracting private investment into India’s growing maritime and logistics sector.

Phased Fleet Expansion Strategy

The JV’s fleet will include very large crude carriers (VLCCs), very large gas carriers (VLGCs), Suezmax and Aframax tankers, medium-range product tankers, and offshore support vessels. To accelerate expansion, the JV will employ a dual strategy   purchasing second-hand vessels while also 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,” said Capt. Tyagi. The final fleet mix will be decided after the JV’s formal incorporation.

Revenue and Profitability Outlook

All vessels will be operated by SCI, which will earn a management fee for its services. Financial viability will be guided by an internal rate of return (IRR) benchmark of 10–11%, ensuring sustainable profitability.

Capt. Tyagi also projected that the JV could 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%,” he noted. The newer, energy-efficient ships are expected to secure better charter rates, further boosting returns.

To ensure steady business, 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 added.

Funding Model and Future Plans

The JV will adhere to a 70:30 debt-equity ratio for financing ship purchases, aligning with standard global maritime practices. With SCI holding 50% equity participation, its capital burden will be reduced as costs are shared among partners.

Alongside the JV initiative, SCI is independently expanding its fleet   having already added two very large gas carriers (VLGCs) this fiscal and planning to acquire 10–12 more vessels in FY27, according to Capt. Tyagi.

A Boost for India’s Maritime Ambitions

This investment marks a transformational step in India’s pursuit of self-reliance in maritime transport, fleet ownership, and shipbuilding. By blending public and private capital under the MDF and engaging major OMCs, the initiative is set to drive job creation, strengthen domestic shipyards, and enhance India’s global shipping footprint.