Battle of shipyards puts warship production on hold

“The government has received complaints from two private shipyards. We are examining them,” Defence Minister A K Antony told reporters here on Tuesday.

In what may be an indication of the defence ministry’s stand, Parliamentary Consultative Committee was informed about the decision on Monday before MDL was officially told.

Earlier this month, MDL and Pipavav Shipyard announced the formation of a 50-50 joint venture for sharing the work on the warship-building contracts received by MDL.

However, the announcement received protests from three private shipyards –  Larsen and Toubro, ABG Shipyard and Bharati Shipyard.

Bharati in fact refused to acknowledge the announcement and wrote a letter to the MDL asking for the deadline for the submission of proposals for the joint venture.

Antony said the government opened up defence shipbuilding to private shipyards because of the long waiting period at the defence public sector undertakings like the MDL.

“But we need a policy guideline on joint venture formation. The defence ministry is urgently preparing a policy,” he said after inaugurating the Coast Guard commander’s conference here.

Antony said the ministry would study the complaints received from private shipyards.

“The issue needs to be fully examined and settled before any forward movement takes place on this front,” he said, adding that India was treading on a new path and would like to ensure that transparency is maintained at all levels.

The minister also cautioned the PSUs saying once the JVs are formed they must compete for contracts and should not get ministry orders on the basis of nomination. MDL is one of India’s largest warship-building shipyards with orders that some reports say could go up to Rs 1 lakh crore ($ 20 billion). Its order book is full till 2020.

The shipyard, which is building six Scorpene submarines and stealth frigates at the moment and would soon start construction of three destroyers, is also undergoing a major overhauling of its ship-building capabilities.