Navy chief Admiral Karambir Singh argues powerfully for more funds to build warships, says will boost economy

"A very large proportion of every rupee spent on the Navy is ploughed back into the Indian economy.”

By Ajai Shukla

Business Standard, 26th July 19

A day after Beijing released a defence White Paper emphasizing the role and profile of the Chinese Navy, India’s navy chief, Admiral Karambir Singh, argued on Thursday for more funds for building naval warships.

With the navy’s budget declining in real terms and the service facing internal defence ministry opposition to its proposal for building a second indigenous aircraft carrier, the navy chief rejected “a narrative, where budgetary allocation for naval shipbuilding is considered by some to be a drain on the economy.”

Addressing a Ficci seminar in New Delhi, Singh rode on the navy’s successful indigenisation programme to make a three-point argument that “Naval shipbuilding actually contributes handsomely to economic growth and nation building.”

Singh first cited a “plough-back effect… [in which] a very large proportion of every rupee spent on the Navy is ploughed back into the Indian economy.”

Illustrating that, Singh pointed out that, with “more than 60 per cent of the naval budget dedicated to capital expenditure, nearly 70 per cent of this has been spent on indigenous sourcing, amounting to nearly Rs 66,000 crores in the last five years.”

Singh said that, since 2014, 80 per cent of warship building approvals (on cost basis) have been reserved for Indian vendors. “Of the total 51 ships and submarines on order at various shipyards as on date, 49 are being constructed indigenously”, he stated.

The only Indian warships being built abroad are two Krivak III frigates in Yantar Shipyard in Russia.

Besides the capital budget, large parts of the revenue budget are also ploughed back into the national economy, said Singh, with Indian companies and workers providing logistics, spares and upgrades to indigenous warships over their three-decade service lives. “GRSE (Garden Reach Shipbuilders & Engineers, Kolkata), for instance, has nearly 2,100 firms registered to support on-going naval shipbuilding projects,” he said.

“Nearly 90 per cent of ship repair by value is undertaken by Indian vendors, mostly micro, small and medium enterprises (MSMEs),” he said. 

Singh’s second point was that warship building catalyses skills development.“Each shipbuilding project involves considerable investment of manpower, with commensurate employment and skilling of workforce. As [warship] platforms become more complex, skill levels are also proportionately upgraded.”

Building a commercial ship of 30,000 tonnes employs 4,000 workers for one-to-two years, with one white-collar worker for every six blue-collar worker. Building a warship of 7,000 tonnes employs 4,800 workers for six-to-eight years. Of these, there is one white-collar worker for every 1.6 blue-collar workers, explained the navy’s design chief, Rear Admiral GK Harish, illustrating the navy chief’s point.

Further, for each worker employed in a warship yard, another 6.4 workers find jobs in ancillary industries that feed into the warship. “Project 17A [to build seven] frigates, for instance, is expected to employ a workforce of about 4,500 workers annually within the yard, but nearly 28,000 personnel per year as outsourced manpower from ancillary industries,” stated Singh. 

                    

Besides individual skilling, warship building spins off new shipyard capabilities, said the chief. For example, India’s largest dry-dock that Cochin Shipyard Ltd is building, primarily for aircraft carriers, would also let CSL service large commercial ships. 

Similarly, indigenous shipbuilding steel that the Defence R&D Organisation developed for INS Vikrant is now going into other vessels too. “Steel Authority of India has supplied nearly 50,000 tonnes of indigenous [warship] steel, which was hitherto being imported,” said the navy chief.

Thirdly, said Singh, “Naval shipbuilding projects contribute to strategic outcomes.” He cited warships built in India for Seychelles, Maldives and Sri Lanka. “There is immense potential to forge strategic partnerships and convert India into a strategic hub for defence shipbuilding exports and repairs to friendly foreign countries. 

However, cost-effective shipbuilding depends on achieving “a certain critical mass”, by galvanizing commercial shipbuilding for the mercantile marine and coastal shipping, he said.

Harish, however painted a gloomy picture of commercial shipbuilding. Between 2002-2007, India’s share of global shipbuilding orders rose six-fold from 0.2 to 1.2 per cent. That year an optimistic government set a target of garnering 7.5 per cent of global orders by 2017. However, after global recession of 2008, India’s share has fallen to 0.01 per cent of the global order book.