India’s Container Manufacturing Plan Shows Intent But May Face Execution Risks

When Finance Minister Nirmala Sitharaman announced a Rs 10,000 crore outlay in the Union Budget for container manufacturing in the country, the message was clear — India wants a seat at a table long dominated by China.

The policy, which is a part of the government’s logistics and maritime infrastructure push, aims to build domestic capacity for manufacturing intermodal containers and reduce dependence on imports, particularly from China, which currently dominates global supply.

According to the Budget proposal, there will be financial support for container manufacturers through viability gap funding and capital subsidies. Other measures include plans to facilitate access to specialised steel, develop testing and certification infrastructure, and improve logistics integration to support domestic production.

Yet the government’s attempt to seed a domestic ecosystem raises a fundamental question: can a subsidy-driven start overcome deep structural disadvantages in cost, scale and industrial capability?

Dharma Ranjan, global logistics and supply chain management expert, believes that incentivising the sector excessively can create long-term dependence. If companies begin relying primarily on subsidies, the focus may shift away from building a sustainable industry and generating employment.

“The objective should be to let the industry operate on its own strengths, enabling firms to become self-reliant and scale manufacturing independently. Ultimately, the sector must be atmanirbhar rather than dependent on continued government support.” Ranjan told The Core.

Industry experts argue that while the funding signals intent, success will hinge on bridging a significant cost gap with China, securing raw materials, building trade demand and attracting private investment.

Government’s Ecosystem Approach

A spokesperson at the Ministry of Ports, Shipping, and Waterways, speaking on condition of anonymity, said the budget allocation was intended to create a full-fledged ecosystem rather than merely subsidising factories.

“We are focusing on the money we are providing to stakeholders to create an ecosystem — every input that goes into making a container, bringing the cost down,” the spokesperson said.

The stakeholders, he added, span container manufacturers, shipping lines, freight forwarders, steel producers and certification agencies.

This ecosystem-based approach reflects recognition that container manufacturing is not a standalone activity. Certification, logistics integration and raw material supply all influence competitiveness.

Globally certified containers require testing and compliance infrastructure, making certification agencies a critical component of the domestic value chain.

“Certification infrastructure also plays a role in ensuring globally acceptable quality. Without credible certification, Indian containers may struggle to gain acceptance in international shipping networks,” the spokesperson added.

China’s Overwhelming Dominance

China dominates the global container manufacturing industry to an extent rarely seen in other industrial sectors. Industry estimates suggest the country accounts for around 85–95% of global dry freight container production, with its share rising during demand surges such as the pandemic logistics boom.

This dominance is largely driven by a cluster of major manufacturers, including China International Marine Containers (CIMC), widely regarded as the world’s largest container producer, along with other large Chinese firms that benefit from scale, automation and integrated steel supply.

The government’s urgency stems from China’s near-monopoly. The spokesperson acknowledges that around 95% of global containers are produced in China, a reality echoed by industry stakeholders.

Rajan warned that China’s aggressive pricing has reshaped the market.

“The country’s scale allows it to flood global markets with low-cost containers, making it difficult for new entrants to compete,” Rajan said.

China’s leadership is supported by its massive steel production capacity, integrated industrial ecosystem and long-term supply relationships with leasing firms. The scale advantage allows Chinese manufacturers to produce containers often $500–$1,000 cheaper than competitors, reinforcing global reliance on their supply.

For countries like India, this dominance presents a formidable challenge, as competing requires not just manufacturing capacity but also cost parity, ecosystem depth and integration with global shipping demand.

Rohit Aggarwal, global supply chain manager, highlighted the scale disparity.

“India produces less than 1% of global container demand, highlighting the daunting capacity expansion required to challenge China’s dominance,” Aggarwal said.

Steel: The Core Cost Challenge

If scale defines the strategic challenge, steel defines the economic one. The spokesperson identified corten steel — an all-weather, corrosion-resistant material — as the single largest cost component, accounting for roughly 60–65% of total container manufacturing expenses.

Unlike conventional structural steel, corten steel requires specific alloy composition and rolling capabilities, which are currently limited in India. Industry estimates suggest that while India produces over 125–130 million tonnes of crude steel annually, specialised weathering steel suitable for container manufacturing accounts for well under 1% of domestic output, creating a supply bottleneck.

China’s advantage lies in its massive steel ecosystem. With annual crude steel production exceeding 1 billion tonnes, Chinese mills benefit from scale, integrated supply chains and long-term contracts with container manufacturers, allowing significantly lower input costs.

In India, by contrast, container manufacturers often rely on small-volume orders and fragmented procurement. This leads to price volatility and higher conversion costs. Industry participants indicate that corten steel prices in India can be 10–15% higher than comparable Chinese material, translating into a $300–$400 cost disadvantage per container even before fabrication and logistics expenses are added.

The challenge is compounded by underutilised demand. While India has the installed capacity to manufacture about 70,000 containers annually, production remains near 25,000 units, limiting steel mills’ incentive to scale specialised output. Without predictable bulk orders, steel producers hesitate to dedicate production lines for container-grade steel.

Additionally, stakeholders highlight logistical and policy constraints. Importing corten steel or scrap involves fluctuating duties and complex compliance processes, increasing procurement timelines and working capital requirements for manufacturers. Smaller firms, in particular, struggle to secure shipload quantities of raw material, further widening the cost gap with China’s integrated producers.

“We are focusing on how we can bridge the gap and make it competitive in India,” the spokesperson said, noting that stakeholder consultations have repeatedly flagged steel pricing and availability as the sector’s primary obstacle.

The ministry’s strategy revolves around stimulating demand to achieve economies of scale. As container production gradually increases, policymakers expect demand for specialised steel to rise, encouraging domestic mills to expand output and offer better pricing through volume-based contracts. Whether this virtuous cycle materialises, however, will depend on sustained orders, policy stability and deeper coordination between steelmakers and container manufacturers.

Industry Scepticism Over Funding Scale

Despite the policy intent, industry experts question whether the Budget allocation is sufficient. Rajan described the outlay as modest compared with global market dynamics, suggesting that without larger investments, domestic manufacturers may struggle to achieve competitive pricing.

Aggarwal quantifies this challenge.

“The allocation may barely cover steel costs for producing one million containers, while infrastructure investments could double that requirement. Sustained funding over multiple years may be necessary to build meaningful capacity,” Aggarwal added.

The scepticism reflects broader concerns about the execution of industrial policy in sectors where global incumbents enjoy advantages.

The Scale Paradox

A central dilemma confronting India’s container push is the “scale paradox”: scale is needed to reduce costs, but competitive costs are required to achieve scale.

“Indian containers currently cost $500–$1,000 more than Chinese equivalents. To compete, manufacturers must produce a 40-foot container at roughly $2,400–$2,450 while maintaining quality parity or superiority,” Aggarwal said.

Achieving this would require dramatic capacity expansion. India’s production, currently around 35,000 containers annually, would need to increase many times over in a short period. Aggarwal warns that if scaling lags, China could further reduce prices, undermining India’s nascent industry.

Demand-Side Risks

Even if manufacturing capacity expands, utilisation remains a concern. Containers are not merely products but circulating assets whose value depends on trade flows.

Aggarwal emphasises that without sufficient import-export volumes, containers could remain idle, creating financial strain. He suggests India may need to grow exports by 15–20% annually to ensure adequate utilisation, particularly if global operators continue favouring Chinese containers.

“Cheap imports often encourage trading rather than domestic manufacturing, limiting industrial growth and GDP contribution,” Ranjan added.

Raw Material Bottlenecks Beyond Steel

Beyond specialised steel, Rajan highlights broader raw material constraints, including scrap availability and inconsistent import policies. He advocates liberalising scrap imports and promoting recycling of used containers as a transitional strategy.

“We can have dedicated manufacturing clusters with regulatory oversight to manage environmental risks and ensure consistent input quality. Channelising scrap imports through designated agencies could provide smaller manufacturers with a stable supply and improve transparency,” Ranjan said.

“These structural issues have left many existing units operating with idle capacity, while MSMEs remain dependent on large steel suppliers with limited bargaining power,” Ranjan added.

Quality And Technological Capability

Quality considerations present another challenge. Aggarwal points out that India lacks widespread capability in producing salt-resistant steel essential for container durability in marine environments. Developing this technological capacity will be critical for meeting global standards and securing export markets.

Policy Ambition Versus Market Reality

The government’s container manufacturing push represents a strategic attempt to reshape India’s logistics landscape. Yet the initiative’s success will depend on navigating a complex interplay of policy support, industrial capability and global market dynamics.

The spokesperson remains optimistic that ecosystem development and stakeholder coordination will gradually reduce costs. But industry experts caution that without rapid scaling, sustained funding and demand growth, India may struggle to compete with China’s advantages.

Author:   Zinal Dedhia

India’s Rs 10,000-crore push to build a domestic container manufacturing ecosystem aims to cut reliance on China, but industry executives warn structural disadvantages in steel, scale and demand could limit its impact.

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