India intends to invest 850 billion rupees (US$10 billion) in purchasing 112 crude oil tankers by 2040, said people familiar with the matter. The nation, the third-largest oil importer in the world, aims to develop its own fleet to secure supplies.

State-run oil firms currently operate an ageing fleet. Most of these vessels are chartered from global companies. The shipping and petroleum ministries want to change people requesting anonymity due to official restrictions said. Under the first phase of the plan, India will purchase 79 ships. Of these, 30 will be medium-range vessels, the people added.

The order for the purchase of 10 tankers could be issued as early as this month. The ships should be built locally, even with foreign collaboration, will be eligible for purchase.

India's crude oil refining capacity is set to grow even as the world moves toward cleaner energy. The country plans to increase its capacity to 450 million tons by the end of the decade, up from about 250 million tons. Rising domestic and overseas demand for oil products is driving this expansion. Since India relies on imports for the bulk of its crude oil needs, building its own shipping capacity is essential for energy trade.

India targets to raise the share of locally built oil tankers in its fleet to seven per cent by 2030 from the current five per cent. It aims to increase that share to 69 per cent by 2047 — the year India has set as a deadline to become a developed country.

The shipping and petroleum ministries and the government’s Press Information Bureau did not immediately respond to emailed requests for comment.

Earlier this year, Prime Minister Narendra Modi’s government announced a 250 billion-rupee fund to support the country’s maritime sector. One of its goals is to eventually reduce reliance on foreign-built vessels and strengthen indigenous shipbuilding.

India also plans to expand shipping capacity for transporting coal, fertiliser and steel, the people said. Officials plan to replace most of that with India-built ships going forward.

India’s shipbuilding industry is still in its early stages and lacks scale, the people said. They noted that insufficient domestic demand has held back growth. They believe that economies of scale will follow once global shipbuilding companies begin manufacturing in India for the international market.

The MT Maharshi Parashuram is currently the largest India-built oil tanker. It measures 238 metres in length and has a deadweight tonnage of 93,332 metric tons. In comparison, China’s Minsheng Financial Leasing-owned Oceania is 380 metres long and has a deadweight tonnage of 441,584 metric tons.

The Indian government wants to boost demand for ships built locally, the people said. It is inviting shipbuilders from Japan and South Korea and offering them incentives to build in India.

South Korea’s HD Hyundai Heavy Industries Co. is in discussions with India’s state-owned Cochin Shipyard Ltd. to set up a new facility in Kochi, a coastal city in southwestern India, local media reported. India has also held talks with Korean shipbuilders Samsung Heavy Industries Co. and Japan’s Nippon Yusen KK, also known as NYK Line, according to a local official.

Rajiv Jalota, a former chairman of the government-owned Mumbai Port Trust, commented on the plan. He said, “It is a good move from the energy security point of view since the dependence on China for a lot of these services is high. The world needs to develop alternatives.”