The Union government's move on Saturday regarding domestic manufacture of submarines will be a shot in the arm for companies already in talks with multinational corporations (MNCs) for the technology to do so.
For the project in question, of building six conventional subs, four MNCs are interested in providing technology and supervising production, with equity participation. DCNS of France, Kockums of Sweden, Rosoboron Export of Russia and ThyssenKrupp of Germany are interested in partnering with Indian companies and have initiated talks, say industry sources. On Saturday, the government cleared a proposal to build six Stealth subs, which could each cost Rs 50,000-60,000 crore. The MNCs are enthused that the Modi government has cleared 49 per cent equity participation in the sector by foreign companies in an Indian joint venture. If a foreign company agrees to transfer technology, then it can apply for a higher equity cap in the venture. At present, Mazagon Dock in this city is building Scorpenes under what is termed Project P75I, with the collaboration of DCNS. The project is five years behind schedule. The government clearance will clearly benefit India's largest private shipyards, such as Pipavav Defence in Gujarat and Larsen & Toubro's in Katupalli, Tamil Nadu. Pipavav has a distinct advantage due to availability of a large and operational dry dock, say its officials. L&T has also welcomed the government's move to allow private sector companies to bid.
There has been a seven-year delay in deciding on the proposal. In this time, the navy has gone through a tough time, including an accident on two of its Russia-made subs, with the loss of 24 lives. One sank in Mumbai dock and the second was heavily damaged. Till now, refits of subs have been a monopoly of state-owned Mazagon and Hindustan Shipyard. Yet, in 11 years, the latter has not even delivered one refit. Mazagon has an order book of over Rs 1 lakh crore, comprising frigates, destroyers and subs. It, too, says the Union comptroller and auditor general, has a time and cost overrun issue in delivering naval warships.