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  India   All India  07 May 2019  The public-private tussle in India over defence shipbuilding

The public-private tussle in India over defence shipbuilding

THE ASIAN AGE. | ANIL BHAT
Published : May 7, 2019, 5:10 am IST
Updated : May 7, 2019, 5:10 am IST

GRSE is executing an order for five FPVs for the ICG, of which ICGS Priyadarshini is the first in the series.

The government, in line with its policy of increasing the involvement of non-state companies in defence production as part of the Make in India campaign, is to stop giving defence shipping contracts to state-run companies on a so-called nomination basis and throw them open to competitive bidding and allowing the private sector a crack at projects worth thousands of crores of rupees.
 The government, in line with its policy of increasing the involvement of non-state companies in defence production as part of the Make in India campaign, is to stop giving defence shipping contracts to state-run companies on a so-called nomination basis and throw them open to competitive bidding and allowing the private sector a crack at projects worth thousands of crores of rupees.

Garden Reach Ship Builders and Engineers Ltd. (GRSE), Kolkata, delivered its 99th and 100th warships to the Indian Coast Guard (ICG) and the Indian Navy (IN) on March 27 and 30, 2019 respectively. The 100th ship is a Landing Craft Utility (LCU), L-56 for IN and the 99th is an advanced Fast Patrol Vessel (FPV) for ICG. This makes GRSE the first Indian shipyard to make and deliver 100 warships to the IN, the ICG and the Mauritius Coast Guard.

GRSE, which started in 1961 with the delivery of a Seaward Defence Boat (Mk-I) is today a Miniratna Category 1 public sector undertaking (which has made profits continuously for the last three years or earned a net profit of Rs 30 crore or more in one of the three years) and a leading public sector undertaking under the administrative control of the ministry of defence (DPSU), building warships.

 

With 100 warships successfully built, the shipyard already boasts of constructing the highest number of warships in the country. Sixty seven of the 100 warships have been for the IN and are varied in their range and scope. From frigates, missile corvettes, anti-submarine warfare corvettes, fleet tankers, landing ship tanks, landing craft utility to survey vessels, offshore patrol vessels and fast attack craft — the repertoire is rich and varied. GRSE has been involved in infrastructure modernisation over the past decades with an investment worth Rs 6,050 million towards creating an integrated shipbuilding facility, enabling the concurrent construction of 20 ships.

 

LCU L56 is the sixth of eight such vessels ordered by the Navy. The entire design of these LCU Mark IV ships has been developed in-house by GRSE as per requirements specified by the Navy. The construction of the remainder of two ships is progressing as per the schedule. The LCU Mk-IV ship is an amphibious ship with its primary role being transportation and deployment of main battle tanks, armoured vehicles, troops and equipment from ship to shore. These ships based at the Andaman and Nicobar Command, can be deployed for multi-role activities like beaching, search and rescue and disaster relief operations, as well as supply and replenishment and evacuation from distant islands. The LCU, 63 m in length and 11 m wide, has a displacement of 830 tons with a low draught of 1.7 m and can achieve a speed of 15 knots. The LCU is designed to accommodate 216 personnel and is equipped with two indigenous CRN 91 guns to provide artillery fire support during landing operations. The ship is fitted with state-of-the-art equipment and advanced systems like the Integrated Bridge System (IBS) and the Integrated Platform Management System (IPMS).

 

The advanced FPV has been named as ICGS Priyadarshini by the Coast Guard. GRSE is executing an order for five FPVs for the ICG, of which ICGS Priyadarshini is the first in the series. The balance — four ships — are in the advanced stages of construction. The FPV is a medium-range surface vessel capable of operations in the maritime zones of India. These fuel efficient and powerful platforms are designed to perform multipurpose operations e.g. patrolling, anti-smuggling, anti-poaching and rescue operations. The entire design of these FPVs has been developed in-house by GRSE as per requirements specified by the ICG. The ship is 50 m long, 7.5 m wide with a displacement of around 308 tons, and it is designed for a maximum speed of 34 knots and an endurance of more than 1,500 nautical miles. It has three main engines with advanced control systems, water jet units and an “integrated bridge system” integrating all communication and navigation systems. The ship is also fitted with a 40/60 gun as main armament and will also have improved habitability features with fully air conditioned modular accommodation for 35 personnel.

 

Currently GRSE has a strong order book of approximately Rs 21,700 crore, providing the shipyard with a deep pool of revenue-generating projects. Fourteen ships across five projects including four survey vessels (large), won on a competitive basis, are presently under construction. GRSE has also been declared the successful bidder in competitive bidding for another eight Anti Submarine Warfare Shallow Water Craft (ASWSWCs) for the Indian Navy.

However, it needs to be noted that the success story of GRSE and other DPSU shipyards is largely owing to their being nominated by the government to build ships for the IN and the ICG. As such, this was a proverbial honeymoon, which despite the government’s announcement about making the playing field level by giving ship-building contracts to private companies also, has not ended.

 

In April 2018, the Prime Minister’s Office (PMO) directed the government’s premier policy-making body, the Niti Aayog, to assess the status of shipbuilding in the defence sector and make recommendations to streamline the process to avoid delays, promote competition and ensure efficiency. After detailed deliberations, a high-level team under the chairmanship of Niti Aayog CEO Amitabh Kant proposed that all future contracts be given out on a transparent competitive basis.

The government, in line with its policy of increasing the involvement of non-state companies in defence production as part of the Make in India campaign, is to stop giving defence shipping contracts to state-run companies on a so-called nomination basis and throw them open to competitive bidding and allowing the private sector a crack at projects worth thousands of crores of rupees. In May 2018, according to a policy framework approved by the PMO, all future contracts for warships and other requirements of the Indian Navy will be awarded after competitive bidding. The main beneficiaries so far include Reliance Defence and L&T Shipbuilding apart from a few others. The government is keen on encouraging shipbuilding capacity and capability enhancement in the private sector, the official said. Defence public sector undertaking shipyards will be encouraged to maximise outsourcing to the extent possible.

 

In July 2018, it was reported that the Central Vigilance Commission (CVC) asked government departments and central public sector undertakings to follow an open and transparent process to award work contracts rather than on a nomination basis. This move came after the CVC received reports of alleged corruption in certain work contracts given to private firms mainly by the central public sector undertakings and a few other government departments.

While the policy was to be put into effect soon, it emerges that contracts have been largely given to nine defence public sector undertakings (DPSUs) under the ministry of defence (MoD), including GRSE, Mazagon Dock Shipbuilders, Goa Shipyard Limited and Hindustan Shipyard Limited.

 

Appendix II, from open sources, provides details of shipbuilding orders nominated to DPSUs. This chart has to be viewed with two more substantial orders by the MoD to DPSUs announced on April 29 and 30, 2019.

On April 29, 2019, the MoD awarded GRSE a contract worth Rs 6,311.32 crore to build eight ASWSWCs for the IN. The request for the proposal was issued by the IN to DPSU shipyards and Indian private shipyards in April 2014, with GRSE emerging as the successful bidder for design, construction and supply of the eight ASWSWCs. The first ship is to be delivered within 42 months from the contract signing date and the subsequent balance ships delivery schedule will be two ships per year. The project completion time is 84 months. GRSE is currently handling major projects to make three Stealth Frigates for the Indian Navy under the P17A Project, ASW Corvettes for the Indian Navy, LCUs for the Indian Navy, four Survey Vessels (Large) for the Indian Navy, FPVs for the Indian Coast Guard, etc.

 

On April 30, 2019, contracts for 16 ASW SWC ships have been signed for construction of eight ships each from M/s CSL, Kochi and GRSE, Kolkata respectively. Delivery of the ships is scheduled to commence from October 22, with two ships per year subsequently by each shipyard.

In view of India’s vast coastline of 7,516.6 km with 12 major ports, 184 minor ports and 1,197 island territories, coastal surveillance for anti-submarine warfare operations is considered critical. The induction of these specialised ships with lower draught would significantly enhance the IN’s coastal shallow water anti-submarine warfare capability with improved performance of weapons, censors, hall mounted and towed sonars. These ships are capable of subsurface surveillance of coastal waters and laying of mines, making them a potent platform.

 

However, to meaningfully fulfil the “Make in India” programme, by involving/providing fair opportunities to private companies for exclusively making products or by collaboration with DPSUs, both will need to be streamlined for capabilities, infrastructures and work-cultures.

The writer, a retired Army officer, is a defence and security analyst based in New Delhi

Tags: grse, indian navy