Indian Oil Corporation (IOC) is preparing to order at least 10 medium-range oil tankers from a joint venture led by the Shipping Corporation of India (SCI), with the ships to be built at an Indian shipyard, according to people familiar with the matter.

As the world’s third biggest importer and consumer of oil, India relies largely on chartered vessels to move its supplies. The government has been urging state-run companies to secure supply chains, and IOC, along with other public sector oil firms, had once considered creating a shipping company that would construct vessels within the country.

That plan was expected to both boost energy security and generate jobs. But more than a year after it was proposed, the project has not taken off because of the lack of shipbuilding expertise, three sources with direct knowledge said.

Another hurdle was competition from China, where ships are cheaper and delivered faster. This raised doubts over whether it made sense to build in India when imported vessels could also ensure reliable transport. The government, however, insisted on domestic shipbuilding, highlighting the employment it would create.

At one stage, officials suggested a three-way joint venture bringing together Indian oil companies, a foreign shipyard with experience in oil carriers, and a shipping line to operate them.

IOC moved forward with that idea, sources said, though the plan has since been reshaped again.

The company is now expected to buy 10 Aframax carriers, each with a capacity of 80,000 to 120,000 deadweight tons, from a partnership between SCI and an Indian shipyard, possibly Cochin Shipyard.

Other state-run oil firms may take the same approach, sources noted.

An announcement could come on September 20, when Prime Minister Narendra Modi is scheduled to launch India’s global shipbuilding push from Bhavnagar in Gujarat, home to the shipbreaking hub of Alang. The government is also likely to unveil a renewed Ship Building Financial Assistance scheme and a Rs 25,000 crore Maritime Development Fund on the same day.

Plans for Rs 20,000 crore shipbuilding clusters in Gujarat, Andhra Pradesh, Odisha and Maharashtra are also expected to be revealed.

By 2040, Indian oil firms will need about 112 crude carriers to replace an ageing fleet that is mostly hired from overseas companies, according to sources.

Industry estimates show that more than 85 per cent of the USD 100 billion Indian companies have spent on freight in recent years went to foreign vessel owners.

In the first phase, 79 ships are to be ordered, including 30 medium-range carriers, sources said. The goal is to increase the share of Indian-built vessels in the fleet from 5 per cent today to 7 per cent by 2030 and about 70 per cent by 2047.

State-run oil firms will place the orders, the joint venture will build them at Indian shipyards, and SCI will operate the fleet, sources said.

South Korea’s HD Hyundai Heavy Industries and Samsung Heavy Industries, as well as Japan’s Mitsui OSK Line and Nippon Yusen KK (NYK Line), have shown interest in working with Indian yards such as Cochin Shipyard Ltd.