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In a major boost to private participation in warship building in India, the government has given its nod to the stalled joint venture (JV) between defence public sector Mazagon Docks and private sector Pipavav shipyard following cabinet approval to new guidelines for such private-public effort.
The defence ministry had last September put on hold a decision by Mumbai-based Mazagon Docks Limited (MDL) and Gujarat-based shipbuilder Pipavav Defenceand Offshore Engineering Co Ltd to have a tie-up following complaints from rival private sector shipyards.
Now that the guidelines for the public-private defence joint ventures have been formulated, we have given the go-ahead for the MDL-Pipavav JV, provided it conforms to the cabinet-approved guidelines, a top defence ministry official told IANS.
The JV is set to be signed in about a month, the official said.
India has about 150 warships in service with its navy and another 75 warships in its coast guard. The India Navys efforts at indigenisation of naval technologies over the past five decades has resulted in India building nearly 80 per cent of its warships within the country, but till now only in its four Defence Public Sector Undertaking (DPSU) shipyards.
Since India opened up defence production to the private sector in 2000, at least half-a-dozen private shipyards, who were building commercial vessels, have jumped into the warship building fray, to bag a part of the naval vessels acquisition pie. At present, India has placed orders for 49 warships with shipyards, 40 of which are being built in Indian shipyards, planning to induct at the rate of five to seven ships a year over the next decade.
India had in its defence procurement procedure two years ago decided to provide a level playing field to private shipyards and allowed them to bid for shipbuilding contracts on a par with DPSUs.
The MDL-Pipavav JV was announced Sep 12 last year, when Pipavav intimated the Bombay Stock Exchangethat its board had approved the tie-up under which MDL will work with the private sector shipyard on their shipbuilding orders.
Other private shipyards such as Larsen and Toubro, ABG and Bharati questioned the JV formation and protested to the defence ministry against the move, following which the government put the JV on hold till the policy on such ventures was put in place.
The cabinet on Feb 9 this year approved the defence ministry guidelines for its public sector units to establish joint ventures with private firms, a step that will increase opportunities to obtain advanced technologies from foreign sources.
As per the guidelines, defence public sector undertakings will retain the affirmative rights for taking key decisions in the JV company. It also contains provisions for important matters that are critical from a national security perspective, the official said.
It will also enhance fairness and transparency in the selection of the JV partner by the defence public sector units.
MDL is one of the four defence shipyards of the country, apart from the Goa Shipyard, Kolkata-based Garden Reach Shipbuilders and Engineers, and Visakhapatnam-based Hindustan Shipyard. It is a key warship builder of the nation. At present, MDL has orders for building Shivalik-class stealth frigates and six Scorpene diesel-electric submarines.
Pipavav, set up in 1997, is a new entrant in warship building with a massive facility in Gujarat. It was building commercial ships earlier.
The tie-up between MDL and Pipavav is expected to help the defence shipyard to go in for modular ship construction technology.
Warship building in India gets boost through public-private effort | idrw.org
