Atharva Salunke
The current manufacturing push in India is not a marginal adjustment in the overall policy trajectory; it is a structural realignment in the global system dominated by China. The allocation of ₹10,000 crore for the manufacture of shipping containers in the Union Budget 2026 is a paradigm of this shift. Containers are not merely any industrial products; they are the foundational support system for 80-90 percent of the global trade by volume. The ability to dictate the terms of their production directly correlates with freight rates and the overall stability of global trade.
The Scale of Concentration
The production of ISO shipping containers for global distribution constitutes the most geographically concentrated industrial sector across the entire world. The world will receive 85 percent of its ISO shipping containers from China in 2025 because the country produces 4.5 million Twenty-foot Equivalent Units (TEUs) each year. China International Marine Containers (CIMC) stands as the largest manufacturer of ISO shipping containers because the company handles 30 to 40 percent of global ISO shipping container production capacity. Dong Fang International Containers and Singamas represent two of the main ISO shipping container manufacturing companies which operate more than eleven major coastal factories that connect to Chinese steel production centers and export terminals.
Outside of China, production is minor. South Korea contributes around 5 percent of global production, or around 250,000 TEUs annually, while Japan contributes around 3 percent, or around 150,000 TEUs, and Singapore around 2 percent, or close to 100,000 TEUs, mainly for specialised container types. No other country comes close to matching this level of production. This also has direct economic effects. Freight rates for key routes increased five to eight times compared to pre-pandemic norms. While freight rates were affected by a number of factors, container shortages were a major contributor.
India’s Structural Imbalance
India’s ports together process almost 20 million TEUs every year. The four ports of Jawaharlal Nehru Port, Mundra Port, Chennai Port, and Visakhapatnam Port handle most of the container traffic in India. Yet domestic container production capacity remains limited to roughly 30,000 units per year across fragmented manufacturers including APPL Containers Limited, Braithwaite & Company Limited, DCM Hyundai Limited, Ritveyraaj Cargo Shipping Containers, and AB Sea Container Private Limited.
Cost asymmetry further constrains domestic competitiveness. Historically, Indian-manufactured containers have been 30-40 percent more expensive than Chinese imports, with Chinese units often USD 700-800 cheaper per container. In a low-margin global shipping industry, such differentials are decisive.
Industrial Foundations: Steel and Foundry Capacity
India’s upstream industrial base provides credible grounding for expansion. The country is the world’s third-largest crude steel producer, with approximately 167 million tonnes of annual production and installed capacity of around 235 million tonnes. Container manufacturing depends on weathering steel grades such as CORTEN A and B, equivalent to ASTM A588 and A606 standards. Indian mills produce comparable grades under IRS specifications.
Major steel producers such as Tata Steel and Jindal Steel & Power supply weathering steel plates and sheets across thickness ranges from 0.3 millimetres to 120 millimetres. This meets the structural requirements for side panels, roof sheets, corner posts, and bottom rails.
Steel corner castings, precision load-bearing components required under ISO 1161 specifications (178 × 162 × 118 millimetres dimensional standards), are manufactured using cast steel grades such as SCW480 and SCW490. The foundry clusters of India located in Rajkot and Ahmedabad and Chennai produce ISO-compliant castings through their shell mould and investment casting methods. India possesses sufficient materials for production and maintains complete ability to meet rules and regulations. The constraint lies in scale, integration, and cost efficiency.
The Economics of Ecosystem Density
China gains its competitive edge through deep ecosystem advantages which exceed its labor costs and subsidy resources. China operates its container manufacturing facilities through coastal industrial clusters which connect steel mills, casting facilities, paint manufacturers, flooring suppliers, logistics operators, and ports through their geographical layout. The system achieves lower costs through its ability to process high volumes of material. Export cycles determine financing arrangements because production facilities meet changes in customer demand through their flexible operation capabilities.
The comprehensive maritime system of China provides significant benefits to the country. The country leads globally in shipbuilding output and controls significant overseas port infrastructure. The production system achieves strategic efficiency through its ability to synchronize all stages from manufacturing to distribution and logistical operations.
India has a divided system for producing shipping containers which consists of multiple independent manufacturing sites. The manufacturing companies operate from various locations across the country. The existing testing facilities remain insufficient to meet testing requirements. The supply chains for flooring materials which include marine plywood and bamboo composite materials as well as sealing systems and locking assemblies do not yet achieve full local supply distribution at operational scale. Shipping companies face higher operating expenses which reduce their ability to compete because they operate at distances from major shipping ports like Mundra Chennai and Visakhapatnam.
The organization needs to achieve cost equivalence through volume production which exceeds its existing capacity by a substantial amount.
Geopolitics and Economic Statecraft
Manufacturing expansion also has a geopolitical risk dimension. China’s dominance in the supply of intermediate goods in the electronics, machinery, renewable energy, and pharmaceutical sectors is considerable. India’s imports from China are over USD 100 billion annually, a large percentage of which is in the form of intermediate goods.
Assuming a situation where Indian container manufacturing expands rapidly, but the components or machinery used in the containers continue to be supplied from outside the country, the geopolitical risks remain. Economic coercion does not always have to be in the form of trade sanctions. It could be in the form of regulations, licensing issues, price changes, or customs-related issues.
China’s economic coercion in other geopolitical situations has been a hallmark of the country’s approach. The geopolitical implication is clear: manufacturing expansion must be matched by input diversification.
Incentives Versus Structural Reform
India’s policy framework for the industrial sector has focused on incentivising growth, including the production-linked incentives scheme in the electronics, pharmaceuticals, and renewable energy sectors. Incentives are required for entry, but sustained competitive performance would be driven by structural factors like logistics efficiency, energy costs, regulatory predictability, and skill depth.
The manufacturing of containers is subject to business cycles. If the business of freight movement contracts globally, the order for containers would fall significantly. It’s important for the industry to be able to sustain these cycles without excessive fiscal dependence.
If India wants to achieve even 10-15 percent of the global container manufacturing business in the next ten years, it would be ten times the current domestic order. That would be 500,000-750,000 TEUs every year.
Strategic Implications
Worldwide container production needs to expand its manufacturing sites to different locations because it decreases the risk of operational failures. The Indian economy benefits from local production because it improves freight access while reducing price volatility risks and strengthening trade capabilities. The international market environment provides greater power to companies which use even partial product replacement in their operations.
Geopolitical reactions maintain their ability to impact manufacturing activities. New companies face decreased profitability because existing market leaders use their pricing strategies to establish competitive advantages. Companies need to achieve cost efficiency and establish industry partnerships to maintain their market position. The manufacturing sector has become a vital tool for governments to exercise their authority according to the current situation. The degree of industrial development determines both employment rates and economic growth while also determining a country’s power to negotiate in international trade agreements.
Conclusion
India’s commitment of ₹10,000 crores to the manufacturing of containers is a data-driven acknowledgment of the structural imbalance. With nearly 20 million TEUs being processed every year and negligible domestic production, the reliance on a single dominant source is a quantifiable risk.
India has the upstream capability in steel production, foundry operations, and standards compliance. However, the question remains of integration at scale. To match the cost advantage of Chinese production, density has to be achieved in the ecosystem, clustering around ports has to be done, and long-term funding and input sourcing must be diversified.
Concentration is power. Diversification is the redistribution of power. India’s strategic shift in manufacturing will be a success not based on allocation but based on conversion. Production is no longer merely economic production. It is the infrastructure of power.
About the Contributor:
Atharva Salunke is a Policy Research Associate at NITI TANTRA and a Visiting Researcher and Assistant Editor at IMPRI. He has recently graduated with a Bachelor’s degree in Political Science from Sir Parashurambhau College, Pune.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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