NEW DELHI - India's private shipyards are unhappy with a Ministry of Defense decision to nominate state-owned shipyard Goa Shipyard to build two Russian Krivak-class stealth frigates over two private sector competitors, Larsen & Toubro and Reliance Defence and Engineering.
During a meeting with Russian defense officials last week, MoD has cleared a $4.48 billion program to acquire four Krivak-class stealth frigates under which two will be built by Russia's United Shipbuilding Corporation and the remaining two by Goa Shipyard, a senior MoD official said.
"A formal contract is expected to be awarded within the next four months", the official said, adding that USC will deliver the frigates in the next four years but Goa Shipyard will take eight years to deliver.
"The private-sector shipyards have already brought it to the notice to MoD informally their unhappiness on giving GSL the contract to build the two Krivak class frigates on nomination basis," an executive of the industry lobby group Federation of Indian Chambers of Commerce and Industry said, requesting anonymity to speak candidly.
"They (private shipyards) want greater orders to push the private sector," the FICCI executive noted.
Anil Jai Singh, retired Indian Navy Commodore and defense analyst, said, "This decision (to nominate GSL for two Krivak class frigates) has indeed surprised me."
GSL is a very capable yard but has never built anything of the size and sophistication of the Krivaks, Singh said.
"It seems that the MoD continues to live in the A K Anthony (former Defense Minister) era with nominations more the rule than the exception," says Sujeet Samaddar, retired Indian Navy commodore and defense analyst. "The private shipyards must be allowed to compete. But having said that, unless the private sector shipyards deliver on their existing orders of simple ships, there can be very little ground to trust them to deliver complicated warships."
Samaddar, however, does not doubt the capability of Goa Shipyard and said, "GSL has made more than 16 anti-submarine-warfare corvettes in the past and on paper they can build it."
The Indian navy has been negotiating with Russia for over three years to acquire the Krivak frigates.
"The Krivaks (Indian navy's Talwar class) are very sophisticated frigates and combine high stealth with lethal kinetic capability," Singh added.
"This is a longstanding requirement of the Indian navy and will possibly cover the gap created by the decommissioning of Godavari & Rajput-class warships that would fall due in the next three to four years," Samaddar said.
By 2027, the Indian navy aims to have 198 ships against the current fleet strength of 137 warships. With a shortage of 61 warships, the service is currently building 48 warships at various Indian shipyards.
An Indian navy official said, "Because of their lack of experience in building major warships, the private sector is way behind in warship building but needs greater exposure to orders."
However, Singh is critical of the decision to nominate state-owned shipyards at the cost of growth of the private sector shipyards. "Private shipyards are hardly being given any orders despite the state-owned shipyards creaking under the load of their order book leading to cost and time overruns in almost all projects. Of the four major private shipyards in the country, two are bankrupt."