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Indian Public-Private Shipbuilding Venture OK'd

Jul. 24, 2013 - 05:45PM   |  
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NEW DELHI — India’s Defence Ministry has approved a partnership between the country’s largest state-owned shipbuilder and a private shipbuilder after complaints over transparency put the decision on hold in late 2011.

The deal, approved July 12, would partner state-owned Mazagon Docks Limited (MDL) and privately held Pipavav Defence and Offshore Engineering Company.

It’s a win-win for the companies, as MDL’s order book outstrips its capacity and ability to deliver to the Indian Navy on time. Pipavav, meanwhile, has the capacity — including one of the largest dry docks in the world — but not the orders.

Whether MDL, with an order book of more than US $22 billion, would be able to outsource and split its order book with Pipavav through the joint venture is still not clear, as the MoD has yet to clarify the relationship.

No MoD official was available to answer the question or comment on the issue.

A source in the ministry, however, said the joint venture will have to compete for Indian Navy and Coast Guard orders.

An MoD official said more partnerships between state-owned warship builders and private shipyards are likely as the MoD finalizes a policy on public-private business partnerships.

The MDL-Pipavav joint venture will likely emerge as a major player for the Navy’s plan to spend $12 billion on six conventional subs.

The Defense Acquisition Council cleared the procurement nearly two years ago, the MoD source said, and a formal tender is in the final stages of approval.

Without specifying the submarine program, R.K. Shrawat, MDL’s chairman and managing director, said, “Pipavav is a modern shipyard, and we will jointly bid for future projects.”

Anil Jai Singh, president of Pipavav, said “There should be no reason why the [joint venture] should not get into submarine construction if all offloading of work by MDL is to be through a competitive bidding process. However, it may be a bit premature to comment extensively on this till more clarity on the procedure is available.”

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