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New Delhi. 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 Defence and 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,
he said.
India has about 150 warships in service with
its navy and another 75 warships in its coast
guard. The Indian Navy’s 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
Exchange that 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.
(IANS)
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