India Commits $1.4 Billion to the Creation of a Domestic P&I Club

India has made progress in establishing a local P&I club to protect the country’s shipping interests. Over the weekend, the cabinet approved creation of Bharat Maritime Insurance Pool (BMI), supported by a sovereign guarantee amounting to about $1.4 billion. The cabinet said that this domestic insurance pool will ensure Indian vessels have access to affordable maritime insurance, even when transiting volatile routes – like the sanctioned oil trade with Russia.

The proposal to create an Indian P&I club was initially announced in 2024 as part of the government’s ambition to transform India into a maritime powerhouse. Rising geopolitical tensions have affected access to European marine insurance markets for vessels dealing in Russian oil; Northern European governments have also begun concerted efforts to detain and inspect vessels that carry Russian crude without proper flagging or insurance. War risk profiles have also risen markedly in the Strait of Hormuz, Bab el-Mandeb and Black Sea, leading to surging insurance rates. In some cases, there has been uncertainty over the continuous availability of legitimate insurance coverage.

The government has also been concerned that Indian vessels highly depend on International Group of Protection and Indemnity (IGP&I) for big ticket third-party liabilities such as oil spill and cargo damage. With this coverage easily withdrawn in cases of sanctions or wars, the cabinet said that a domestic maritime risk covering pool would help to ensure continuity of trade.

The new BMI pool targets Indian flagged or controlled vessels. It will also include vessels carrying cargo from any international origin to Indian ports and vice-versa. The Cabinet said the pool would cover all maritime risks ranging from Hull and Machinery, Cargo, P&I and war risk. The policies will be issued by insurers that are pool members, using the combined underwriting capacity of the pool, expected to be around $102 million.

Currently, India controls about 1.5% of the world’s shipping fleet. It has plans to move to top five position of largest flag state countries by 2047, with a goal of controlling a vessel capacity of over 100 million GT of capacity.

Notable progress has been made, with India announcing this month that its ship registry crossed 14.2 million GT for the first time. The milestone was hit after 92 vessels were added to the registry in the last year. Oil tankers contributed the largest share, with 11 additions equivalent to 737, 582 GT. In addition, six containerships were added with a total of 167,296 GT.