Burdened defence shipyards embrace private sector.
Today, a day after handing over a brand new stealth frigate, INS Sahyadri, to the Indian Navy, warship builder Mazagon Dock Ltd (MDL) announced the formation of two joint venture companies to help address an order book too large to handle by itself.
In a statement, it says MDL “has signed shareholder agreements for setting up JVs with private shipyards Pipavav Defence & Offshore Engineering Co Ltd, Mumbai, and Larsen & Toubro for construction of surface warships and conventional submarines, respectively”.
The Ventures, it says, “will leverage the strengths of the respective JV partners in the public and private sectors to work out a collaborative strategy for taking the nation towards self-sufficiency in warship construction”. And, that MDL might explore additional ventures “with other leading shipbuilders” for “diversifying its product profile”. The order book would be the envy of any warship builder. Under construction in MDL’s berths are three destroyers of Project 15A — INS Kolkata, INS Kochi and INS Chennai — joining the navy’s fleet early next year. Also on order are four more destroyers of Project 15B, to be followed by four stealth frigates of the so-called Project 17A.
In its highly secured East Yard, MDL is fabricating six Scorpene submarines, all of which are scheduled (after three years of delay) to join the navy between 2015 and 2018. Also looming on the horizon is Project 75I, which involves building six more conventional submarines, in parallel with Project 75.
However, India’s premier defence shipyard has neither the space nor the personnel to handle this workload. So, MDL wants to farm out work to the private sector, capitalising on newly created warship building capacities in shipyards built by Pipavav and L&T.
“We will synergise our capabilities with the infrastructure and expertise in the private sector,” says MDL’s chairman, Rear Admiral (Retired) Rahul Kumar Shrawat. “MDL began identifying a suitable JV partner last year. Some major players were dissatisfied with the process (protests from shipyards last year led the MoD to cancel MDL’s announced JV with Pipavav, and to issue guidelines for forming JVs in February). We restarted the process, following the MoD’s guidelines…and our team has now identified L&T as a partner for submarine building, and Pipavav for surface ships.”
MoD sources said another defence shipyard, Garden Reach Shipbuilders and Engineers (GRSE), Kolkata, is also exploring JVs with the private sector. GRSE is full to capacity with building four anti-submarine corvettes in Project 28. It will also build three stealth frigates (in cooperation with MDL) in Project 17A. Observers of India’s shipbuilding programmes regard this shift of production to the private sector as inevitable. The Indian Navy, the fastest growing of the three services, has a growing requirement of warships as South Block pays increased attention to India’s maritime interests, a focus intensified by Washington’s “pivot to Asia” and China’s growing assertiveness in the Western Pacific. In line with this trend, several private shipyards — including L&T, Pipavav and ABG — have built capabilities.
Still, L&T, with its proud engineering pedigree and its accomplishment in the Arihant programme, hardly regards itself as a junior partner to MDL. L&T has long coveted the long-delayed Project 75I, which involves building six conventional submarines for the navy in parallel with the Scorpenes. Says M V Kotwal, who oversees L&T’s defence business: “The JV can assist MDL with its current orders, but L&T is not foreclosing its options to pursue submarine orders independently. The MoD knows that India has two independent entities that are capable of building submarines: MDL and L&T.”
L&T also challenges the navy’s insistence on building the first two submarines of Project 75I abroad, with the next four being built in India. “L&T has invested heavily in skills and capital and the government must realise the navy’s requirements can be met in this country. So, the MoD should drastically cut down on importing naval platforms,” the company said.