Mumbai: India’s newest private sector shipbuilder, Pipavav Shipyard Ltd, plans to build vessels for the country’s navy at its facility in Gujarat in western India, making it the second private firm in the country, after Larsen and Toubro Ltd (L&T), to venture into this business.
India will invest more than Rs50,000 crore over the next 15-20 years to build 24 submarines by 2025-30, spending $14-16 billion (Rs56,420- 64,480 crore).
The country has already signed a $3.5 billion deal with French firm DCNS, or Direction des Constructions Navales Services, in October 2005 to acquire six Scorpene-class submarines.
Defence venture: L&T’s shipbuilding yard in Hajira. Currently, L&T is the only licence holder for building warships in the private sector.
Pipavav Shipyard, which disclosed its plan in a filing with stock market regulator Securities and Exchange Board of India in the run-up to a share sale to raise about Rs800 crore, will bid for the navy’s project when it invites requests for proposals to build the remaining 18 submarines locally.
However, without experience in building and repairing naval ships, Pipavav, promoted by SKIL Infrastructure Ltd, will have to team up with an experienced shipyard or a technology partner to become eligible to bid for the order. “We need many different things to move forward on this,” said a company executive, who did not wish to be identified ahead of an approval from the stock market regulator for its public issue.
“We need to investigate which yard is approved by the government to build warships and whether we can have a joint venture with that yard,” he said. “If this requires a licence from the government, we will apply for it.”
The navy’s project included a licensed production of submarines in India under a technology transfer agreement, which was awarded to state-owned Mazagon Dock Ltd. Mumbai-based Mazagon Dock was contracted to deliver one submarine a year beginning 2012. It takes a minimum of six years to build a submarine.
Currently, only Mazagon Dock, Goa Shipyard Ltd and Garden Reach Shipbuilders and Engineers Ltd are authorized to build warships. All the three yards are state-owned entities controlled by the defence ministry. In the private sector, only L&T holds a licence to build warships.
Cochin Shipyard Ltd, another state-run yard controlled by the shipping ministry, has a licence to build air-defence ships. It is building India’s first aircraft carrier—a 37,500 tonne vessel that can accommodate 12 MiG-29 Ks, eight Tejas Light Combat aircraft, 10 helicopters, 160 officers and 1,400 sailors.
The Indian Navy is also looking to take over another state-run shipyard, Hindustan Shipyard Ltd, which is now controlled by the shipping ministry.
A group of ministers, headed by external affairs minister Pranab Mukherjee, is discussing a proposal to transfer the shipyard, located close to the headquarters of the eastern naval command at the port city of Visakhapatnam, to the navy. This will boost India’s warship-building capabilities and cater to the navy’s requirements.