SOURCE: AFI
The Indian Navy’s ambition to expand its fleet to 175–200 warships by 2035 is a bold vision, driven by the need to counter growing maritime threats, particularly from China’s expanding naval presence in the Indian Ocean. However, achieving this goal is increasingly at risk due to the Ministry of Defense’s (MoD) persistent preference for state-owned shipyards over private ones.
As highlighted in a 2022 Defense News report, the Indian Navy is unlikely to meet its fleet expansion targets due to funding constraints and the government’s bias toward public sector shipyards, which has left private players like Pipavav Shipyard (now under Swan Defence and Heavy Industries Ltd) struggling to secure contracts. It is time for the MoD to reverse this trend and actively encourage private sector shipyards to develop warships, leveraging their potential to boost capacity, innovation, and efficiency.
The MoD’s favoritism toward state-owned shipyards, such as Mazagon Dock Shipbuilders Limited (MDL), Goa Shipyard Limited (GSL), and Hindustan Shipyard Limited (HSL), has stifled the growth of private shipbuilding. According to the Defense News report, of 50 naval contracts awarded, only three—worth a mere $71.42 million—went to private players, with the remaining 47 allocated to state-owned yards. This skewed allocation prioritizes public sector units (PSUs) for critical projects like aircraft carriers, destroyers, frigates, and anti-submarine warfare corvettes, despite their struggles with delays and cost overruns.
State-owned shipyards, while experienced, face significant limitations. Their decision-making is constrained by bureaucratic processes, and they lack the agility to adopt advanced technologies like 3D printing or machine-learning systems, which are transforming shipbuilding in countries like China, Japan, and South Korea. Moreover, PSU shipyards are stretched thin, with order books full and infrastructure upgrades lagging. For instance, MDL’s modernization efforts, costing $114.3 million, aim to increase warship and submarine production, but these upgrades are still underway, and capacity remains a bottleneck.
Private shipyards like Pipavav, Larsen & Toubro (L&T), and others possess the infrastructure and potential to alleviate these pressures. Pipavav, India’s largest shipyard, boasts a 662 x 65-meter dry dock, a 600-tonne Goliath crane, and a steel fabrication capacity of 144,000 tonnes annually—surpassing the combined capacity of India’s four PSU shipyards. Its recent success in completing three Indian Coast Guard vessels (Fast Patrol Vessels and Offshore Patrol Vessels) and a private tug ahead of schedule demonstrates its capability. Yet, private yards remain underutilized due to the MoD’s reluctance to award them significant warship contracts.
Historically, private shipyards have shown promise when given opportunities. L&T’s Kattupalli facility successfully built offshore patrol vessels and interceptor boats for the Coast Guard, while Pipavav was initially contracted for the Shachi-class naval OPVs before the project’s cancellation due to delays and financial issues under its previous management. These examples highlight that private yards can deliver when supported with clear policies and adequate contracts.
Why Private Sector Involvement is Critical
- Increased Capacity: The Indian Navy’s 66 ships on order as of September 2024, with a tonnage of over 200,000 tons, demand a robust industrial base. PSU shipyards alone cannot meet this demand, as their modernization projects will take years to fully scale up. Private yards, with existing infrastructure, can bridge this gap, ensuring timely delivery of warships.
- Innovation and Agility: Private shipyards have greater operational and financial autonomy, enabling faster decision-making and partnerships with global firms. For instance, Pipavav tied up with France’s DCNS (now Naval Group) for landing platform docks (LPDs), while L&T partnered with Spain’s Navantia. These collaborations bring cutting-edge technology and expertise, which PSU yards struggle to access due to bureaucratic hurdles.
- Economic Benefits: Empowering private shipyards aligns with the “Make in India” initiative, creating jobs and boosting the maritime economy. Pipavav’s recent recruitment of 1,200 personnel and its export-oriented vision underscore the potential for private yards to drive economic growth while meeting defense needs.
- Lessons from Past Failures: The collapse of private yards like ABG Shipyard and Bharati Shipyard, and Pipavav’s struggles under Reliance Naval, were partly due to insufficient government support and inconsistent contract awards. The MoD must learn from these failures by providing long-term contracts and financial incentives to ensure private yards remain viable.
The Indian Navy’s goal of a 200-ship fleet by 2035 is unattainable without a vibrant private shipbuilding sector. The MoD’s preference for state-owned shipyards has constrained capacity, stifled innovation, and left private yards like Pipavav underutilized, despite their proven capabilities. By embracing private shipyards through equitable contract awards, incentives, and partnerships, the MoD can unlock the full potential of India’s maritime industrial base. This shift is not just a necessity for naval expansion but a strategic imperative to ensure India’s maritime security in an increasingly contested Indian Ocean.
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