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INS Kolkata : A Giant Leap for Indian Navy

By Deepak Parvatiyar

August 19, 2014

The recent induction of the country’s largest indigenously built (60 per cent indigenisation) warship INS Kolkata, designed by Navy’s design bureau, and constructed by the Mazagon Dock Limited (MDL), into the Indian Navy reiterates India’s defence production capabilities.

Next in the line is INS Kamorta (90 per cent indigenisation) – the first of four anti-submarine Kamorta-class stealth corvettes built by Garden Reach Shipbuilders & Engineers, Kolkata, which is ready for commissioning.

INS Kolkata is the next-generation of guided-missile destroyers in the 6,800 tonnes range and incorporates stealth features. INS Kochi and INS Chennai, that follow INS Kolkata at eight month intervals, are the other Kolkata class vessels being built by the Mazagon Dock Limited – the country’s premier shipyard constructing warships as well as offshore platforms.

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Indian Navy: Growing Strength

While dedicating the vessel to the nation on 16th of this month, Prime Minister Narendra Modi described the warship as a proof of India’s ‘intellectual prowess”. “In the coming days, INS Kolkata will inspire confidence to those involved in maritime trade,” he said.

Indeed, the indigenously built 6,800 tonne warship showcases our warship building technology to the world, but at the same time also shifts the focus on Navy’s In-house design capabilities (18 designs to which over 80 ships have been produced); developments of our Research and development capabilities (through DRDO); and our shipbuilding yards.

Extending Reach Overseas

That Indian technology is in demand is well reflected by the fact that the MDL has many foreign clients and is building vessels for Singapore, the Iranian Navy, UK, the Gulf and Mozambique among others.

Studies show that shipbuilding is projected to be worth Rs 9200 crore by 2015. Five state-owned shipyards — MDL, Garden Reach Shipbuilders & Engineers (GRSE), Cochin Shipyard, Goa Shipyard and Vishakhapatnam-based Hindustan Shipyard together reported net sales of Rs 6,341 crore and a net profit of Rs 689 crore in financial year 2013. In the past five years, their combined net sales have grown at a compounded annual rate of 30 per cent, while net profit expanded at 7.1 per cent.

Challenges for the ship-building industry

Yet, it is important to note that only six of India’s 27 shipbuilding yards are under central public sector and only four of the six are under the administrative control of the Ministry of Defence and are also known as Defence Public Sector Undertaking shipyards and are primarily responsible for constructive naval ships. (Though, some others, both in the public and private sector are also involved in the naval shipbuilding).

It is understandable therefore that despite such profit levels, the shipbuilding industry has not been able to meet the growing requirement of the Navy, resulting in huge time and cost overruns. Even in the case of INS Kolkata, the cost escalated from an original Rs. 3580 crore to Rs. 11,662 crore, because of delays. In case of INS Kamorta, it escalated from Rs. 3051 crore to Rs.7852 crore.

Involving the private sector

As it is, the Indian Navy has embarked on a large-scale modernisation drive. There has been a demand in certain quarters of the Navy on the need to enhance the capacity and expertise of our shipyards to reduce ‘shipbuilding period’. There is a growing realisation that the involvement of the private sector could ensure a planned growth and sustenance of a vibrant maritime force.

This obviously offers significant opportunities for Indian Industry to partner with Navy’s modernisation programmes and Coastal protection activities. At this crucial juncture, the government stress on opening up the defence sector could be a viable option to bridge this gap. Perhaps this could also prove a turnaround for the private shipbuilding yards in the country which are struggling to cope up with the stiff competition from the state owned shipyards. It may be pointed out that the combined leverage ratio for three listed private shipyards – Bharati Shipyard, ABG Shipyard and Pipavav Defence and Offshore Engineering (formerly Pipavav Shipyard) rose to 3.2 in the FY 2013 from 0.53 in the FY 2008.

Yet, opening up the market for naval shipbuilding could never be a permanent solution for the fledgling fortunes of the private players. Consider that fact that China has 1000 ship yards holding around 45% of the global share in shipbuilding! It has upstaged the leaders South Korea which now holds second place with a 29% of market share. India lags very much behind at 0.3% of the shipbuilding market share with only 27 ship yards.
It is time that the Indian shipbuilding industry gets decked up for a much larger role. It requires setting up of more shipyards and even more for defence purposes.