Navy torpedoes Indian private shipyards' role in new Project - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Thursday 26 August 2010

Navy torpedoes Indian private shipyards' role in new Project

Scorpene submarine hull sections being readied at Mazagon Dock Ltd, Mumbai. The Scorpene programme (Project 75) is currently running 30-months late

(This is the first article of a four-part series on India's critical, yet significantly delayed, submarine programme)

by Ajai Shukla
Business Standard, 30th Aug 10

A far-reaching decision by the Ministry of Defence (MoD) will jolt private Indian shipbuilders that are eager to participate in India’s submarine building programme. Top sources in the ministry have told Business Standard that its apex Defence Acquisition Council (DAC) has decided to exclude Indian private shipyards from the construction of six submarines for the Indian Navy under Project 75I. Instead, the first two submarines will be built at a foreign shipyard.

Project 75I initially envisaged that all six submarines would be built in India. MDL was to build three; Hindustan Shipyard Limited (HSL) --- recently acquired by the MoD from the Ministry of Shipping --- would build one; while Indian private sector shipyards --- L&T and Pipavav --- would compete to build two submarines. But the Indian Navy’s insistence on building two submarines abroad has torpedoed the private sector shipbuilders out of the picture.

The navy’s demand, explains a senior admiral on condition of anonymity, stems from the delays that have been endemic to indigenous submarine construction. India bought four HDW submarines in the 1980s. HDW’s shipyard in Germany built two of them in just 56 months each. In contrast, MDL took 98 months and 116 months respectively to build the other two. Mazagon Dock is also running 30 months late in delivering the first of six Scorpene submarines that it was contracted to build under Project 75.

“At least two submarines will come in quickly by building them abroad”, declares the admiral. “We are desperately short of submarines.” A performance audit of the Indian Navy by the Comptroller and Auditor General (CAG) has documented that just seven or eight of India’s 15 submarines are operational at any given time against a projected requirement of at least 24.

Yet, curiously, despite the dismal track record of Mazagon Dock, the defence acquisition council has decided to hand it a prime role in Project 75I as well. While the cost of Project 75I is still not known, it will substantially exceed the Rs 23,562 crores that India paid French companies Armaris and DCNS for Project 75, since building two submarines abroad will inflate the cost.

Furthermore, that decision will require fresh sanction from the Cabinet Committee on Security (CCS) --- typically involving a 12-24 month delay --- since the current sanction mandates that all the submarines must be built in India.

Only after that will a tender be issued to identify a foreign technology partner. Amongst the possible bidders for the contract are Amur Shipbuilding Plant, Russia; German shipyard, HDW; Spain’s Navantia; Italy’s Fincantieri; and France’s, DCNS.

In 1999, the top-level Cabinet Committee on Security (CCS) approved a 30-Year Submarine Construction Plan, for 24 conventional submarines to be constructed in India. This sanctioned two simultaneous construction lines: six submarines built from western technology; and six based on Russian know-how. After that 12 indigenously designed submarines were to be built.

The navy believes that Russian submarines have greater endurance, firepower and strategic utility; while western submarines are stealthier and, therefore, harder to detect. It was reasoned that Indian designers would adopt the best of both traditions when designing the 12 indigenous submarines.

Private companies, especially L&T and Pipavav have invested thousands of crores of rupees to build world-class shipyards, and have lobbied intensely for a share of the submarine programme. Over the last decade, L&T has played the central role in building and outfitting the nuclear-powered, nuclear missile submarine, INS Arihant, and will do so for its two successor vessels as well.

Senior L&T officials have argued that Mazagon Dock would have its hands full with Scorpene production until at least 2019 and has no capacity to take on another three submarines. But the MoD has presented a detailed plan for the shipyard to set up a second submarine line.

(Tomorrow: Part 2: The MoD plan for setting up India’s second submarine line)


  1. there is a figure in excess of 10 billion $ being mentioned in connection to the project 75I.
    it seems extraordinary that 6 submarine however advanced or foreign build will cost so much.

    can you clear the confusion over that figure?

  2. If the two submarines that are to be build abroad is built in L&T, there will not be any delay. Sometimes this private guys (like L&T) may be able to provide the boats ahead of time than any foreign shipyards. Let the subs be build indigenously, so that for long term strategy, the private players also learn to make submarines. The Navy must act wise and not stupid. Is there corruption involved in pushing for building it in foreign shipyard? What's happening to the Indigenous Navy?

  3. Navy torpedoes? Navy just asked 2 submarines to be built abroad so that they may have them quickly. That is justified considering the dire submarine shortage. They did not put any condition regarding where the rest should be built. It is the MOD which is giving orders to already overburdened Mazagon Dock at the cost of private shipyards.
    The funny part is that all this info is in your article itself. So why the misleading headline?

  4. I think its the corruption fueling the idea of building subs in foreign docs(yes i do agree that requirement is immediate , even INDIAN defence industry including private players is self sufficient enough to deliver fast) . L&T & other private players in INDIA has got huge capacity for building ships & subs in homeland. If the same type of attitude from MoD continues, private players will soon back off from defence(how will one quantify survival with 1000s of crores investment without business). MoD has to think rationally. Instead of just speaking about Indigenisation only by words , it has to shell some amount on R&D by funding private players instead of pouring billions of tax payers money into foreign land. Ajay ji i have really concern about security of submarine if it is build on foreign ports, what is the guarantee that it would not be fitted with equipments that give out info about current locations???. When INDIA is so concerned about 3G base stations from China for commercial market, they should be more careful about defence. Mr Anthony & Head of Indian Defence forces please think before u INK deals, its about INDIA not about yourself always.

  5. Anon 07:28

    So basically if someone takes a decision, it means corruption is involved. That's probably the reason nobody is willing to take a decision because invariably somebody or the other stands up and says corruption. Defense preparedness takes a hit...

  6. The pace and the progress at which the P 75(I) project has progressed indicate a deliberate attempt for creating an ambiguous situation that smells of a now possible corruption angle. According to media reports, the project has been estimated to be nearly Rs 55,000 Crores. For 2 subs, it could well be over Rs 18,000 Crores which is nearly the cost of ongoing six Scorpene submarines being constructed at MDL!!

    Why has Navy allowed this project to get so much delayed that now an aura of urgency is being created to get 2 subs from abroad instead of building them here in Indian shipyards? Do we have scarcity of technical expertise in our indigenous shipyards that we need to buy foreign built submarines? As regards the timelines projections, I tend to agree with the statement of anonymous 07:28. I only wish this matter gets probed so that we could learn from its findings for our future defence procurement projects.

    In the past, I believe that Govt mantra has always advocated for indigenous defence products and strengthening of its indigenous defence capabilities. By going into this ‘Buy Global’ decision we are letting a golden opportunity slip-by for enhancing our indigenous competence level in the complex submarine building field.

    God bless the Navy and the MoD for this ridicules decision!!

  7. Navy has been champion of indianisation of its defence needs. However, their prime responsibility is to defend Indian sea waters and probably they know a thing or two better than us general people to have opted for this route. As far as I am concerned, our defence preparedness is more important than long term goal to reverse our foreign dependency. A good balancing act is required and I hope navy is doing that.

  8. This is quite a surprise and retrograde step from IN. L&T has the financial muscle, significant manufacturing expertise, capable people at all levels (right from CEO to the shop floor fabricator) and a genuine interest in MilInd which makes it our best under the circumstances. Why not cultivate them now instead of repenting at a future date?

    Comparing MDL with L&T may not be the best thing to do though L&T has her own set of delayed projects (largely on account of imported MoC).

    If this is even partially because AMN went to town about having constructed ATV then it would be the wrong thing to do.

    - Manne

  9. babudom at its best. the navy is filled with morons who keep going to the supplier who is always late in deliveries.. and then makes it worse by producing 2 subs outside india instead of fostering pvt sector growth in the country. indeed, our navy is very short sighted.

    i guess, babudom has affected the navy too. i used to have respect for the navy above the army and air force for leading the way in indegenising defence products.. but i guess they are not much different after all.

  10. Are our defence decission makers and implementers men with perverted minds? I mean China is encircling us and their strength in submarines is well known and we are still debating where the 2nd line of submarines are to be built! Ridiculous. Corruption at all levels including Navy. Have the Indian private shipyards ever built an indigeneous submarine? Then from where is the question of "delay if built in Indian private shipyards" is coming? And why should a fresh go-ahead from CCS take 12-14 months? Is the signature of CCS members long enough not to be done in less than 365 days or are they illetarate now so that the process of literacy takes such long time.Our government has failed in defence planning for last 63 years and its a shame that no minister has come forward and said: "I am accountable".

  11. Lets get real. Since when do the Armed Forces override the MoD in deciding where manufacturing orders would be placed? The unnamed Admiral would be right about MDL being incompetent as far as timelines go. However, in that case the order should’ve gone to L&T and not MDL, irrespective of whether 2 subs are built abroad or not. This is clearly a case of MOD pushing for orders for MDL to keep up pretence of indigenous orders, while at the same time making enough money by awarding 2 subs from abroad, maybe because L&T didn’t offer enough money!
    This way MOD comes out smelling of roses – they appear to heed the Navy’s need for quick delivery on 2 subs, contribute to providing orders for MDL as well as make money!

  12. Our defence procurement procedure is the worst of example of Indian babudom.

    Ajaiji, tell them Indian navy shiuld be happy if they want the submarine in 2010 than they will get the first submarine by 2025. IAF wanted MRCA in 2002, they may get it buy 2015. Scorpene was selected in 2003 and first submarine by 2015.


  13. This is a question of trust for the Navy. They don't trust the yards in India to deliver the subs on time. This is a completely valid concern for the Navy - just look at the track record for subs.

    Plus the admiral is only asking for 2 subs to be build abroad so that he can address the critical shortage of subs ASAP. Lets not over react here. The title of the article is completely misleading and purposely done to generate some negative comments towards the Navy.


  14. Ajai you have lost it this time. It is not the Navy but the MoD and the corrupt DPSUs that are to blame for this fiasco. Lazy DPSUs will never let go of any business that comes their way. They don't care about the quality or timelines of their deliveries.

  15. To create competition, quality, delivery and technology enhancement, orders shall preferably be equally split from the very beginning in to all the three sectors i.e. Govt/Public, Private and Foreign.

  16. Cujo, you just dont get it, do you?

    its not about "trust".. if we never let the pvt sector take part, we will never "trust" them and will always keep importing and producing from the shitty PSU shipyards. If we are to become self sufficient, pvt sector HAS to take part.

  17. Ajai,

    Just noticed the picture caption which mentions that it is the Karakoram Highway. The reason I posed the question was the third language in the signboard which looked like Russian.


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