Goa Shipyard supplies first patrol vessel, but L&T has supplied five in almost the same time frame
By Ajai Shukla
Business Standard, 16th May 20
With Defence Minister Rajnath Singh commissioning three new ships on Friday, the Indian Coast Guard (ICG) – the world’s fourth largest – crossed the landmark of 150 ships, most of them built indigenously.
The vessels, commissioned in Goa via video conferencing from Delhi, included the Indian Coast Guard Ship (ICGS) Sachet, designed and built by Goa Shipyard Limited (GSL). In addition, Rajnath Singh commissioned two fast interceptor boats (IBs), built by Larsen & Toubro (L&T) at its Hazira Shipyard.
“Despite challenges like Covid-19, it is a great example of our commitment and determination for the safety and security of the country… It is noteworthy that Indian shipyards are making significant contribution to the vision of ‘Make in India’ and ‘Self-reliant India’ campaign which was recently inspired by our Prime Minister,” said Rajnath.
Yet a comparative analysis of ongoing OPV manufacture by GSL and L&T reveals that the private sector firm has delivered clearly better outcomes than the defence public sector undertaking (DPSU).
In terms of cost, L&T has charged the ICG an average of Rs 187 crore for each of the seven OPVs it contracted in 2015 to build at its new shipyard at Katupalli, near Chennai in Tamil Nadu. In contrast, GSL is charging the ICG about Rs 320 crore for each of the five OPVs it contracted to build in 2016 – more than 60 per cent costlier.
In terms of build time, GSL has taken four years to deliver the first OPV. In contrast, L&T will have taken just five years to deliver its sixth OPV later this year. The seventh and last OPV will be delivered next year within six years of inking the contract. Each of these OPVs has been delivered ahead of schedule.
Naval industry analysts say the comparison is valid because the L&T and GSL OPVs are very similar in size and performance. Both are almost the same size: GSL’s OPVs displace 2,350 tonnes, compared to the 2,140 tonnes displaced by L&T’s ship.
In terms of performance, the OPVs built by L&T have a maximum speed of 26 knots and an operating endurance of 5,000 nautical miles. The OPVs built by GSL are slower at 23 knots, but have slightly longer sea legs with an endurance of 6,000 nautical miles.
The only significant capability advantage the GSL vessels have over the L&T OPVs is the fitment of three weapons on each – one 30-millimetre (mm) gun and two 12.7 mm guns – to engage hostile targets. While GSL is supplying OPVs with these guns fitted, L&T is contractually required to kit the OPVs to fit these guns later. However the cost of all three guns is below Rs 10 crore.
Notwithstanding its demonstrated capability, which includes building the hulls of India’s nuclear missile submarines, L&T finds it hard to compete against the four public sector shipyards – GSL, Mazagon Dock Ltd, Garden Reach Shipbuilders and Engineers and Hindustan Shipyard Ltd. That is because the DPSU yards are handed over contracts on “nomination basis” by the ministry of defence (MoD), especially for building bigger naval warships such as corvettes, frigates and destroyers.
Those large contracts allow the DPSU shipyards to cross-subsidise low bids in competitive tenders where private sector shipyards are permitted.
Even so, private shipbuilders, especially L&T, have begun scoring in competitive contracts, such as the Rs 750 crore contract to design and build 12 Fast Patrol Vessels for the Vietnam Border Guard. Despite Covid-19 related delays, L&T is well ahead of schedule in construction.
Having sunk over Rs 3,500 crore into building its Katupalli shipyard, the stakes are high for L&T in the first major warship contract the private sector has been allowed into: the Rs 13,600 crore contract to build six New Generation Missile Vessels (NGMVs).
Govt should give order to pvt shipyards. They will perform better too.
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