India plans new shipping firm to expand fleet by 1,000 ships in next decade seeking bigger chunk of revenue from trade

India plans to set up a new shipping company to expand its fleet by at least 1,000 ships in the next decade, as Asia's third-largest economy seeks a bigger chunk of revenue from surging trade, two government officials said.

The South Asian nation is spending billions of dollars to refurbish infrastructure in its race to become a world-class manufacturer with Prime Minister Narendra Modi, who won a third term this week, aiming for it to be a developed nation by 2047.

The yet-to-be-named firm will be jointly owned by state-run companies in the oil, gas and fertiliser industries, which would provide it with business, along with the state-run Shipping Corp of India and foreign companies.

India's oil and shipping ministries did not respond to requests for comment.

The aim is to reduce freight outgoings to foreign firms by at least a third by 2047, said the sources, who sought anonymity as they were not authorised to speak to the media.

"Current estimates show freight costs will rise to $400 billion as we boost our exports and imports by 2047," said one of the sources, who has direct knowledge of the matter.

Indian companies paid freight costs of $85 billion in the financial year 2019/20, of which $75 billion was paid for use of foreign vessels, the source added.

The turn to foreign carriers comes as India's shipping fleet has not kept pace with its surge in trade, including imports of energy and exports of refined oil products.

India has a fleet of about 1,500 large vessels including tankers, gas carriers, container ships and dry bulk carriers, the sources said.

In January India's oil and shipping ministries agreed that all state-run oil companies and the planned company work together, a government document seen by Reuters showed. They would draw on the expertise of the Shipping Corp of India in "tanker acquisition and ownership, operations and other areas of shipping", it added.