Home >industry >Defence ministry to give Rs50,000 crore orders to shipping ministry

Mumbai: The defence ministry is channelling projects worth 50,000 crore through the shipping ministry, which will in turn enlist Cochin Shipyard Ltd to farm out some of the work to debt-ridden private sector shipyards.

Defence minister Manohar Parrikar told reporters at an event dedicated to the maritime industry that his ministry would sign an in-principle agreement with the shipping ministry to that effect.

A shipping ministry official said on condition of anonymity that the in-principle agreement had been scheduled for signature on Thursday, but had been delayed.

Shipping minister Nitin Gadkari said the projects would include one costing 18,000 crore to construct nine ships to carry liquefied natural gas (LNG).

The plan is aimed at offering debt-ridden private ship builders a helping hand by channelling the projects through the shipping ministry and Cochin Shipyard.

The current defence procurement policy (DPP) prohibits financially stressed private shipbuilders from participating in defence tenders.

Parrikar said banks could come on board along with the shipping ministry to suggest ways and means to accommodate private shipyards.

However, this is a plan of action and the defence and shipping ministries are yet to finalise details.

“This is just a recipe. We cannot tell you how the food will taste," Parrikar said.

Bharati Defence & Infrastructure Ltd and ABG Shipyard Ltd, two of India’s private shipyards, are both facing acute financial stress.

“Such a move (to disallow stressed shipbuilders from participating in defence tenders) does not make sense," said V. Kumar, managing director of Bharati Defence & Infrastructure, which changed its name from Bharati Shipyard Ltd after it secured a permit from the government to build defence ships.

“When Prime Minister Narendra Modi is going all out to support Indian shipbuilders, this move will hinder the revival plans of many yards," he said.

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