The Indian plan of reaching a fleet of 175 ships in the following five years is destined to fail due to insufficient funds and because of the preference of the government to support state-owned shipyards over private business. With the government favouring state-owned shipyards for building critical naval platforms, projects undergo delays and additional costs, Navy officials state (Vivek, Defense News, 2022). The Indian Navy is currently equipped with 130 ships, and 39 vessels are under construction. However, a $1.5 billion annual budget allocated to shipbuilding programs is not enough to meet the capability deficit. Additionally, only three naval contracts of $71.42 million were assigned to private shipbuilders, with the remaining 47 projects given to state-owned shipyards. In this respect, 40 ships are envisaged to the Navy, whereas 10 for the Indian Coast Guard.
For example, the Larsen&Toubro (L&T) shipbuilding private company completed a floating dock program for the Navy and built offshore patrol vessels, and interceptor boats for the Coast Guard. Nevertheless, the remaining maritime projects, including the construction of training ships by Bharati Shipyard, and offshore patrol vessels by Reliance Naval, have been cancelled due to financial problems. This last shipbuilder stopped its production operations in December 2018. United Shipbuilding Corporation of Russia has expressed its interest in purchasing the assets of Reliance Naval but had then withdrawn the proposal in mid-2021, mentioning the unbearable shipbuilding business in India.
While some private players such as ABG Shipyard and Bharati Shipyard were forced to declare bankruptcy, L&T and Shoft Shipyard have survived, with the latter serving as a subcontractor to state-owned shipyards. Private companies have delivered 101 vessels to the Indian Coast Guard over the past 20 years, whereas state-owned shipyards delivered only 62 small auxiliary vessels.
From a different perspective, state-owned shipbuilders provided 59 ships to the Navy in the past two decades, whilst private shipyards have not been assigned any big-ticket extensive ships program since 2001. The government should be allocating $13.85 billion for new shipbuilding projects for the next five years. Again, $7.85 billion is headed to state-owned shipyards, while the remainder will be allocated through competition under the public-private partnership model. By doing so, the work production will be offloaded to private shipyards. With state-owned shipyards struggling technologically, the government plans to implement new shipbuilding practices for ongoing and future projects to “increase efficiency and productivity, and reduce build periods to avoid cost overruns”, the Minister of Defence states.
Written by Gabriela Corina Tanasa
Bibliography:
Raghuvanshi, Vivek: ‘India’s Navy, private shipyards flounder as government gives preference to state-owned firms’, Defense News, (January 10, 2022). [online]. Available at: https://www.defensenews.com/naval/2022/01/09/indias-navy-private-shipyards-flounder-as-government-gives-preference-to-state-owned-firms/?utm_source=Sailthru&utm_medium=email&utm_campaign=Exclusive%201.10.22&utm_term=Editorial%20-%20Breaking%20News. Accessed January 12, 2022
