The ability of Indian PSU shipyards – which have been hobbled by serious capacity issues – to deliver ships and submarines on time is doubtful given their poor track record of time and cost overruns. In addition, PSU yards simply lack the capacity to produce ships at the required rates. One industry source estimates PSU yards can only deliver about $1-2 billion worth of warships annually – thus leading to a serious mismatch between requirements and production capacity. However, ongoing yard modernization programs, which are close to completion, should mitigate this problem to some extent.
Private Shipyards to the Rescue?
Logically, this is where private shipyards would come into play to fill this gap. But PSU yards have stalled progress in this regard by citing the lack of warship building experience and suitable infrastructure at private shipyards.
CGI of the five OPVs being built by Pipavav Offshore & Defence , a private shipyard. This contract was notable in that it broke new ground for warship building in India, hitherto the domain of Defense Ministry-owned shipyards known as defense public sector units (DPSU). This OPV is similar in size, tonnage and armament to the Goa Shipyard-built ships. Photo by M. Mazumdar
What is left unsaid is that PSU yards are simply protecting their turf, as warship building has been the exclusive preserve of MoD-owned PSU shipyards. Until very recently, that is. As such, the Indian MoD has been very deliberate in awarding shipbuilding contracts – for relatively unsophisticated vessels like offshore patrol vessels and training ships – to private yards.
In 2011, the Indian MoD, which needs ships and lots of them quickly, found a compromise solution by amending its defense procurement procedure (DPP) to allow public private partnerships (PPP) wherein private shipyards could form joint ventures (JVs) with PSU yards to build warships and submarines.
MDL was quick to announce that it wanted to partner with Pipavav to form a JV, although approval was held up by protests from rival bidders. This issue was finally resolved in early May 2012, when the MoD announced that it had given the go ahead for a 50:50 JV to be named Mazagon Dock Pipavav. This JV will execute part of the existing order book of MDL, currently valued at $21.69 billion USD, and also bid for future contracts. More JVs along the same lines are expected in due course.
No doubt, the Indian Navy is hoping for dividends in terms of much reduced build times from these PPP as well as the modernization of PSU yards if it is to build up its balanced blue water fleet within planned timelines.
Part 3 of this series looks at Indian naval aviation and its growth plans.
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Lt. Edward T. Kreiner, Sr., USN (Retired)
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Chuck Oldham (Editor)
2:13 PM June 26, 2012
With all the “foreign” procurement from foreign nations, it would appear that India will have a
verey difficult time with logistics, maintenance and the sustaining of readiness. Interesting, also, is the requirement for training of crews for these vessels. Also, of interest, is why does India find it necessary to build and acquire such a large force. Wonder what out National Security Agency and the Joint Chiefs of Staff thanink about these actions on the part of India. I faiil to see any American hardware involved……
8:54 PM June 26, 2012
India is certainly working on necking down the logistics streams, in part by building more and more of their own designs, including the upcoming carrier projects. As for your second question, about why India finds it necessary to build and acquire such a large force, the answer is China. And finally, with respect to American hardware, it isn’t for lack of trying on the American end. With the way the world is changing, I think we can expect American/Indian ties to grow closer.