L&T to grab early spotlight at Defexpo with first pvt sector warship - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Sunday 8 April 2018

L&T to grab early spotlight at Defexpo with first pvt sector warship

ICGS Vikram, seen here on its sea trials, which it cleared successfully last month

Ajai Shukla
Business Standard, 9th April 18

The Ministry of Defence (MoD) is presenting Defexpo India 2018, a four-day land and naval systems exposition that will kick off in Chennai on Wednesday, as a display of Indian defence industrial capability. Underscoring that point, the first offshore patrol vessel (OPV) built by a private shipyard will join operational service that morning.

While Defence Minister Nirmala Sitharaman opens Defexpo at Kancheepuram, south of Chennai, her junior minister, Subhash Bhamre, will commission Indian Coast Guard Ship (ICGS) Vikram, a 2,140-tonne OPV, at Larsen & Toubro’s (L&T’s) new Kattupalli shipyard, north of the city.

Public sector defence shipyards such as Mazagon Dock Shipbuilders, Garden Reach Shipbuilders & Engineers, and Goa Shipyard (GSL) are infamous for time delays and cost overruns in building warships. This is especially so in delivering the first of a new class of vessels. In contrast, L&T is delivering ICGS Vikram on schedule, and without any cost overrun.

The public sector GSL earlier took 72 months to build an OPV. Only now has it begun delivering OPVs in the 36-month time frame that L&T took for its first vessel. Meanwhile, another private shipyard, Reliance Naval and Engineering’s facility at Pipavav, is struggling to deliver five naval OPVs on order.

L&T designed the Vikram-class OPVs in its warship design centre at Manapakkam, Chennai, making it the first significant warship fully designed and built in private sector facilities. Company officials claim the design centre can easily design larger capital warships like corvettes, frigates, and destroyers.

L&T brings an impressive engineering pedigree to shipbuilding. Its Hazira shipyard built the hull of India’s nuclear submarines, INS Arihant, and is supplying hulls for its successor vessels as well.

Notwithstanding those skills and even after investing ~50 billion in the Kattupalli shipyard, the MoD is unwilling to trust L&T with building capital warships, says Jayant Patil, who heads the company’s defence business. He says Kattupalli already has the capacity to build 10-11 ships a year at full tilt, but since capital warship orders are given ‘on nomination’ to public sector shipyards, Kattupalli currently utilises just one-fifth of its capacity.

In three recent shipbuilding orders, public sector shipyards comfortably underbid L&T. An analysis by this newspaper (March 24, “Private warship builders live on scraps, figures tell the sad tale”) indicates that ‘nomination’ orders provide public shipyards a financial buffer that lets them underbid on competitive orders. Almost 90 per cent of warship and submarine orders since 2000 have been ‘nominated’ to the public sector.

L&T won the ~13.04-billion contract to build seven OPVs in March 30, 2015. After the Vikram, it must deliver the remaining six OPVs at six-month intervals. Confident company executives say they can speed up that process if the Coast Guard is willing to accept early delivery.

The Vikram-class OPVs are almost 100 metres long. Crewed by 102 persons, these vessels can police India’s maritime zones on missions of up to 5,000 nautical miles (9,250 kilometres, or km). For anti-smuggling and anti-piracy operations, the OPVs are built both fast and lethal. They have a top speed of over 26 knots (50 km per hour) and each has a powerful 30-millimetre (mm) main gun and two 12.7 mm heavy machine guns. 

The OPV is fully equipped to embark a helicopter, and is equipped for basic response to pollution disasters such as oil and chemical spills.

In March, Kattupalli delivered to the Navy a ~4.68 billion floating dry dock, which is now operationally deployed, repairing naval warships in the Andaman & Nicobar Islands.


Private sector shipbuilding

Coast Guard to commission first offshore patrol vessel (OPV) built by private sector
Two major private shipyards functioning: Kattupalli (L&T); and Pipavav (Reliance)
Two other major private shipyards are under liquidation: Bharti and ABG
18 smaller private shipyards exist, but with limited capability to build large vessels
90 per cent of warship orders since 2000 have been “nominated” to public shipyards
In December, navy chief said projects worth Rs 400 billion reserved for private yards
Navy currently has 59 warships/submarines on order, mainly with public sector
Navy says will build private capability, starting with order for next-gen missile boats


  1. Ajai, the 110 ships a year L&T Kattupalli must be a typo. Please recheck.

  2. @Maz

    Quite correct, it was a typo, should be 10-11 ships a year.

    Have corrected it. Thanks for bringing it to my attention.


  3. Broadsword explains it with examples a second time, yet again that of Larsen and Turbo, who strive to survive in an unequal market.
    India’s legacy of not getting rid of the colonial Babus has been adversely effecting it’s Security.
    A legacy of the sheer weight of laws and rules, of bureaucracy, and of vested interests in society.
    I will keep repeating the mantra as before, our country has to withdraw from the old roles of the State – economic regulation, and ownership and management of enterprise. Those roles restrain private investment and jobs creation. They also preserve incumbents, at the cost of allowing new players to grow.

  4. India must open up all of its defence procurement to international tender.
    India must be geared to exporting to the world and politicians actions not statements will count.
    All our private and public companies should be expected compete with foreign companies globally for obtaining orders from Indias Defense procurement.
    There must be no favouritism given to any Indian company over a foreign company.
    Opening up to the world is about constant learning and the discipline of constantly adjusting to the latest in best practices. It’s about installing new technologies, but much more than that. It’s about management knowhow, in supply chains, finance and HR systems, and in tracking of competitors globally. And not just the explicit knowledge, but the tacit knowledge that comes from participation in the world economy and that knowledge is continuously accumulated.
    It’s about the discipline of dynamism – the relentless learning and updating, and the continuous attempts to leapfrog. That is the real logic of opening up to the world.
    Flawed Government policy over decades has created major shortfalls in our Indian economy, compared to China and several East Asian nations. India has 18 per cent of the world’s population, but less than 2 per cent of the world’s exports. Our exports per person are only one-fifth the level seen in China or Vietnam. 
    We all know the reason for our poor performance in exports. The reason is protecting our domestic industry for 70 years since Independence, so that they have been raised to always expect favourable, treatment subsidy or an advantage.
    Is it not time india got down from the Pram and learned to walk.

  5. I hope they dont end up bankrupt because of incompetent govt ministers and biased Navy officers who doesnt have long term vision of nurturing defence pvt industry . DPSU are incompetent they delay the project for years,cost overrun and no value addition vecause of imported parts this makes us rely on foreign manufactures for imooimp and design.why not let pvt industry take a shot ? L&T is one of the best engineering firms in the world the inhouse desig and manufacture A-Z.


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