Overfeeding is a health hazard. In the case of India’s public sector defence shipyards, recipients of Rs 1.3 lakh crore worth of orders from the government over the last decade, it can also breed resentment elsewhere.
The Shipyards Association of India (SAI) that represents 22 private yards says it is campaigning hard to level the playing field. The association says private yards are in dire straits, their finances are severely stressed as public sector yards grab most of the orders for building naval and coast guard vessels simply because they are part of the government.
V Kumar, President of SAI warned that L&T’s Katupalli Shipyard in Tamil Nadu and Reliance Pipavav in Gujarat are operating at 25 per cent capacity.
“The Mumbai-headquartered Bharati Shipyard with facilities in Ratnagiri, Dabhol, Mangalore and Kolkata is limping along at 5 per cent capacity. Medium yards in Mandovi and other places are slightly better off operating at per cent capacity but none is sanguine about the future,” he told Strategic News International on Monday after a meeting with Union Shipping Minister Nitin Gadkari.
He said SAI had sought tariff protection to help the private yards take on foreign competition and wanted the government to restore the 30 per cent subsidy in operation from 2002-07. For reasons not entirely clear, the subsidy was stopped at precisely the time when large orders were coming in for the private yards.
He wanted a level playing field with government-owned shipyards, claiming that the capacity constraints of the latter mean it could take as long as 25 years for vessels to be built and handed over. This, he argued, is hardly good for national security.
It’s a point also made by Commodore KS Subramaniam, former director shipbuilding of Hindustan Shipyard. In a recent analysis, he wrote: “With a hitherto unimpressive track record — particularly with regard to delivery timelines — PSU shipyards need to introspect, to get their act together and step up production rates by adopting modern techniques.”
But convincing the Navy and Coast Guard to go to private yards may take some doing. Senior naval officers told Strategic News International that a few years ago, private shipyards were winning orders by underbidding public sector yards to the tune of 20 per cent to 30 per cent. Those rates were not viable but the private yards were obviously trying to get a toe-hold in the business. Inevitably, most of these projects floundered and with banks and financial institutions now demanding their money back, the private yards have their backs to the wall.
By: Surya Gangadharan
