MUMBAI—Shipping Corp. of India Ltd., the nation’s biggest sea carrier, will borrow $1.3 billion to purchase more vessels to meet rising trade in the country.

The funds will pay for 28 vessels to be delivered within the next three years, its chairman S. Hajara said in an interview in Mumbai. Most of the loans will be raised overseas as it’s cheaper, Hajara said.

Shipping Corp. and other carriers including Nippon Yusen K.K. are increasing borrowing as the price of ships rise to a record. The Indian company also plans to start building ships as South Korean yards are booked out for the next three years.

“The high growth rate in India means increased activities in exports and imports,” said Dharmakirti Joshi, an economist at the credit-rating company Crisil Ltd., a unit of Standard & Poor’s. “The prospects for sea cargo are bullish in the long term.”

The Mumbai-based company needs money to expand as India’s trade rises. India’s exports in the fiscal year ended March 31 rose 23 percent to $155.5 billion while imports rose 27 percent to $236 billion, according to Indian government statistics. Almost 90 percent of India’s trade is done through sea.

Nippon Yusen, Japan’s largest shipping line, will this year increase borrowing from banks 11 percent to about $4 billion, the company said May 15.

Shipping Corp. prefers to borrow overseas because it’s cheaper than borrowing from Indian banks, Hajara said. An overseas loan could carry an interest rate of between 4 percent and 6 percent compared with at least 9 percent in the local market, he said.

Shipping Corp. now has a capacity of about five million deadweight tons. When the 28 ships currently on order are delivered, the capacity will rise by half.

The tonnage will double from the current levels by the end of 2014 when the company takes delivery of 40 more vessels valued at as much as $4 billion, he said. The company now has a fleet of 80 ships.

The weekly Clarkson index, a measure of prices for all types of vessels, rose on May 16 for the first time in more than three months, as shipyards charged customers more. Shipbuilders are raising prices for oil tankers, container ships and other vessels.

The price of a very large crude carrier, the largest of its type, was a record $154.5 million, 5.8 percent more than at the end of December, according to Clarkson Plc.

“The prices are not going to come down,” Hajara said. “They have no reason to reduce the prices. So we have decided that irrespective of prices, we have to augment our capacity.”

Shipping Corp. is in negotiations with Indian and overseas shipbuilders for a joint venture, he said. A decision may be taken by the year-end, he said. (Bloomberg)

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MUMBAI—Shipping Corp. of India Ltd., the nation’s biggest sea carrier, will borrow $1.3 billion to purchase more vessels to meet rising trade in the country.