Shipbuilders’ stocks surge on submarine project approval

MUMBAI: Shares of shipbuilders surged on Friday following reports that the defence ministry has cleared projects to build six conventional submarines for the Indian Navy.

Shares of Mazagon Dock Shipbuilders jumped 5%, while Reliance Navel & Engineering Ltd climbed 6%. Larsen & Toubro's stock rose 2.5%.

The cost of the project has been estimated Rs43,000 crore. The decision comes in the backdrop of a widening gap between Indian and Chinese naval forces.

The decision was taken at a meeting of the Defence Acquisition Council (DAC) chaired by defence minister Rajnath Singh, the PTI report added.

The DAC is the defence ministry's highest decision-making body on procurement. The request for proposal (RFP) from companies for the make-in-India project christened “P-75 India”, or Project 75, will be issued soon. Specifications of the submarines and other critical requirements have been completed by the Indian Navy.

The six submarines to be built will be conventional, diesel-electric vessels and are expected to be larger than the Scorpene-class subs currently under construction at Mazagon Dockyards Ltd in Mumbai. They are likely to be equipped with land attack missiles and anti-ship cruise missiles. The watercraft are also expected to be capable of launching torpedoes at sea.

The Indian Navy’s plans to build the six new submarines come as China’s People’s Liberation Army Navy has embarked on major expansion plans to build a Blue Water Navy, that is, to project power beyond its traditional areas. According to some estimates, its submarine fleet comprises as many as 66 craft, both conventional and nuclear.