If deal goes through, one of our new pvt sector shipyards could bag contract
With defence ministry shipyards unable to meet the Indian Navy’s growing need for warships, New Delhi had no choice but to look to Russian shipyards. Now, with Britain looking to partner India to cut the UK’s warship building costs, one of India’s new private defence shipyards — which have high-tech facilities but no experience in building large, complex warships — could get the opportunity to build its first line of world-class frigates.
Business Standard has learnt that a cash-strapped UK government has approached New Delhi to jointly design and build a next-generation frigate, designated the Global Combat Ship (GCS). While the UK had originally planned to build this alone (then designated the Type 26 frigate), shrinking defence budgets have forced it to seek international partners. And, India, along with other countries, including Brazil, has been invited into a consortium to design and build the GCS.
The British shipyard that will participate in the GCS project belongs to BAE Systems. The ministry of defence (MoD) in New Delhi will nominate an Indian shipyard. With public sector shipyards unable to deliver even the existing orders on time, South Block has little choice but to turn to one of the three new private defence shipyards — L&T, Pipavav or ABG Shipyard.
“There have been meetings at the government-to-government level. There are continued discussions with the Indian government. There has been clear interest from the Indian Navy. But nobody has made a commitment yet,” says Andrew Gallagher, president, BAE Systems India. The response of the other countries approached by the UK is not known.
Senior MoD officials say, off the record, that no decision is imminent on the British offer. But they admit the offer is attractive, since it would provide a learning opportunity for one of India’s big new private sector shipyards to gain experience in building frigates.
The three private shipyards already have orders for small vessels for the navy and the coast guard, none larger than a few hundred tonnes. A frigate, which typically weighs 5,000-6,500 tonnes and has complex electronic battle management systems, is far more difficult to design and build.
BAE Systems has described to Business Standard how Whitehall envisages the designing and building of the GCS. The countries that eventually form the consortium would join heads to frame broadly common specifications for the warship. Presently, the GCS is planned as a flexi-role frigate. This means each vessel could be optimised for any one of the three traditional frigate roles: anti-submarine, air defence or general-purpose. To cater for these different roles and the different requirements of participating countries, the basic GCS design would have 80 per cent commonality in design and components, with 20 per cent remaining flexible.
PLUS FOR INDIA
While design responsibility would be shared between consortium members, each country would build its own frigates. This would protect jobs in the politically sensitive warship-building industry in the West. In the case of India, it would develop the capabilities of a fledgling shipyard.
“The Indian Navy has significant warship requirements and so, India would be extremely influential in such a partnership…The GCS commonality would generate operational benefits between friendly navies. The additional benefit would be that a user, say the Indian Navy, could logistically support these frigates from ports in friendly foreign countries that operate the same ship,” says Gallagher, making the case for India’s participation.
For the force structure of Britain’s Royal Navy, the GCS, (or Type 26 frigate) is crucial. It survived the UK’s budget cuts of 2008, by paring the Royal Navy’s order for the successful Type 45 destroyer. Last year, the Type 26 frigate survived the ruthless spending cuts imposed in Britain’s Strategic Defence and Security Review. But now, with Whitehall having concluded it cannot go it alone, the partnership of countries like India is essential.
So far, India has entered joint development projects only with Russia and Israel and those in the fields of aeronautics and missiles. But the MoD realises the need to expand warship building to the private sector. Defence shipyards, besides already running to capacity, are plagued by time and cost overruns.
Last week, responding to a question in Parliament, defence minister A K Antony admitted, “The cost escalation in major indigenous warship building projects of the Navy, which are running behind schedule, has already been about 225 per cent for Project-15A (destroyers), about 260 per cent for Project-17 (frigates) and about 157 per cent for Project-28 (anti-submarine corvettes).”
Retail inflation rises to 10.79% in January, 2013 from 10.56% in December, 2012.
Move likely to fetch additional revenue of at least Rs 4,000 cr in FY16