MoD Shipyards cry for long-term planning - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Friday 7 December 2007

MoD Shipyards cry for long-term planning

(Concluding part of a 5-part series on shipbuilding)

by Ajai Shukla
Mazagon Docks Ltd, Mumbai
Business Standard, 7th Dec 07

At the Mazagon Docks Ltd (MDL), in Mumbai, there is a palpable sense of accomplishment as the shipyard approaches the finishing stages of the cutting-edge Project 17 frigate-building programme. By June 2008, the first of three 4900-ton, Shivalik class stealth frigates will commence eighteen months of trials with the Indian Navy. The second Shivalik class frigate will start trials by December 2008, followed by the third. Simultaneously, Project 15-A, for three massive 6700-ton Kolkata class destroyers, is making rapid headway.

But the sense of achievement is accompanied by uncertainty about the future. Even while a shortage of Indian defence shipyard capacity has forced the navy to order three costly Krivak class frigates from Russia, construction berths at MDL will lie empty from next year. No new orders are forthcoming because the Ministry of Defence (MoD) is still going through a lengthy decision process about what warships to build, and a sanctioning process that has historically taken at least two years.

The MoD recognises this bottleneck but seems unable expedite matters. Delays in the procurement of Scorpene submarines had resulted in the submarine fabrication line at MDL lying idle for almost a decade. Secretary for Defence Production, Mr KP Singh candidly admits, “the MoD was the bane of that yard (MDL). We had cancelled the order on submarines and not decided on the next order for 7-8 years. For that duration, 50% of the shipyard was waiting for that order to come. You can imagine, what do workers do? Workers leave.. the best welders left at that time. Today you have to train welders.”

Even if the next line of warships are ordered from MDL this year (a highly optimistic proposition) construction berths will lie idle for at least a year, while the shipyard goes through an eighteen-month period of evaluating what materials it needs and placing orders for those. 

Vice Admiral SKK Krishnan, Chairman MDL explains that he should have already had the next order in hand, because, “It’s not as if an order is placed today and I start construction tomorrow. There is a large amount of commercial activity. It takes you six months to get cabling, and nothing less than two years to get the shafting and propellers of a warship. The time for building is also dictated by the availability of engines. There is such a tremendous demand for ship engines that Wartsila and MAN, the biggest makers of diesel engines, are booked solid till 2013.”

But while the MoD is trying to decide on its next order, it is hoping that MDL will build large corvettes for the navy. These are smaller ships than the frigates and destroyers that MDL is equipped to build, but would at least keep the shipyard’s construction lines going. Mr KP Singh says, “They are almost as big ships as what (MDL) is doing today. The order has not been placed as yet, but it will be placed shortly.”

But the shipyards find inexplicable the MoD’s lack of long-term planning and forecasting. India’s warship requirements can be mathematically predicted by considering naval expansion plans and the likely dates of decommissioning of ships that are completing their service lives. It effectively boils down to one frigate every year and one destroyer every two years. Admiral Krishnan notes that it is not difficult to place orders on the three defence shipyards accordingly, catering for a sufficient lead-time to build the ships.

The MDL Chairman points out that, “The defence expenditure budget is predictable, keeping in mind increments and inflation. So it’s easy to manage the fund flows. All countries do this exercise. They can all cite their capital acquisition plans five years in advance.”

For several reasons, both political and bureaucratic, this is not yet a part of India’s defence planning. That leave a defence shipyards, like MDL, which is reaching the end of a warship-building programme, with little option but to occupy itself with building commercial ships. But the highly specialised skill sets that go into building warships remain unutilised until the next order is placed by the MoD.

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