Indigenous Naval Shipbuilding Capability


With the Navy looking forward to induction of various new Naval vessels in coming years in order to keep the dipping operational efficiency at desirable level, it has become imperative for the Government to involve the private sector shipyards and to put a stop to ordering from DPSU/PSU shipyards through nomination  basis. The private shipyards have requisite infrastructure, hi-tech facilities and have the capabilities to undertake manufacturing of world class complex naval vessels.

The need to have a credible naval vessel force is recognized by the defence establishment as the existing inventory comprising of about 150 ships and submarines has been depleting at a very fast rate. Due to the decommissioning of ships, and addition of less number of new inductions, the force level has dipped with the Indian Navy (IN) barely having half of the submarines, destroyers and frigates it needs. Another problem that the ‘blue-water force’ is facing is the high average age of these platforms. To overcome the gaps in the desired number of ships and the existing force level, time bound shipbuilding and induction is inescapable. To this end, the Indian Navy has embarked upon a sizable acquisition programme of high tech ships/vessels, submarines through indigenous shipbuilding efforts.

Indigenous Indian Naval Shipbuilding

India's overall shipbuilding industry comprises of 27 shipyards, of which 6 are under central government, 2 under state government and 19 in the private sector domain. Out of these, India's four Defence Public Sector Undertaking (DPSUs) shipyards, namely, Mazagaon Docks Limited (MDL), Garden Reach Shipbuilders and Engineers (GRSE), Goa Shipyard Limited (GSL) and Hindustan Shipyard Limited (HSL), and one Central Government owned Cochin Shipyard are primarily responsible in building most of the naval warships/vessels for the Indian Navy.Construction of frigates, destroyers and other larger ships in the past has been foothold of MDL and GRSE; while the other two shipyards GSL and HSL are mainly engaged in building only smaller vessels. CSL, the largest shipyard in public sector in terms of dock capacity has been given an order of building India’s first indigenous Aircraft Carrier, INS Vikrant (IAC-1).

The only private-sector firms involved in Indian naval shipbuilding are the three publicly listed shipyards - ABG shipyard and Reliance Naval and Engineering Limited (RNEL), formerly known as Pipavav Defence and Offshore Engineering (PDOCEL) and Bharati Defence and Infrastructure Ltd. Apart from these Larsen & Toubro (L&T) Ltd is another major private sector shipyard involved. 

Naval Procurement: Present Scenario

A total of more than 200 naval vessels/ships have been constructed by all the mentioned Government shipyards so far. As of 2019, there are about 46 naval vessels on order with Indian shipyards (mostly DPSU/PSU). Apart from these there are certain strategic projects which include Technology Demonstrator Vessel (TDV) for DRDO, Advanced Technology Vessel Project (ATVP), Ocean Surveillance Ship (OSS) for National Technical Research Organization (NTRO) that are being undertaken by DPSU/PSU shipyards. Over and above these, IN is also resorting to foreign procurement and has ordered four frigates under Project 11356P/M, upgraded Krivak III class (Talwar-class frigates) worth USD 950 Million from Russian Shipyard Yantar while rest of the two to be built by Goa Shipyard Limited (GSL) through technology transfer. It has also recently leased another Akula-class submarine worth USD 3 Billion from Russia to be inducted by 2025. In addition, Ministry of Defence (MoD) has also approved procurement (RFIs/RFPs issued for these) of 90 more ships and submarines to augment Indian Navy's strength. Refer Table for on-going and future approved programmes of Indian Navy along with estimated cost.

Bearing in mind the on-going and approved procurement programmes in pipeline of ships/vessels, it is expected that the Navy will be spending approximately Rs 450000 Crores over the next 15 years on expanding its naval fleet.

Advantageous Situation for Public Shipyards

Warship building has been the mainstay of the DPSU/PSU shipyards which have undeniably prospered with Government protection and assured orders to the shipyards through ‘nomination’ basis i.e. without competitive bidding with the Government bearing the building/construction cost. Accordingly, there have been cases of delayed deliveries and cost over runs as well in most of the programmes.

The observations by a Comptroller and Auditor General (CAG) Report No. 32 of 2010 - Performance Audit of Indigenous Construction of Indian Naval Warships - regarding awarding of contracts on nomination basis to the GRSE and MDL for construction Kamorta-class corvette/P-28 and P-17 ships respectively substantiates this fact. At the time of nomination of these shipyards, the Defence Ministry was aware of the inadequate facilities/infrastructure at these two shipyards and the fact that in the past, two shipbuilding projects had faced considerable delays. Rather in case of GRSE which has a poor track record in delivering ships on time – it was able to deliver the P16A class of ships only after delays ranging from 51 to 75 months was over looked. The impact of this became clear when, in both projects (P15A and P17), the original delivery dates extended due to inadequate facilities. Resultantly, construction of the P28 ships commenced after a three year delay from the sanctioning date. And as for P17, the first frigate  was  commissioned and after a delay of more than four years from the original delivery date and almost two years from the revised delivery date. This has also led to significant cost increases in these two warship projects. As regards the P28 ships, the project was sanctioned at a cost of Rs 3051.27 Crores. This cost was revised to Rs 79745 Crores (161 per cent increase). As for P17, it was sanctioned at a cost of 2250 Crores which got revised to Rs 8101 Crores (260 percent increase)

Considering the past 20 years, it is clearly seen that around 2.42 Lakh Crores worth orders for building warships/naval vessels have been landed in the lap of DPSU/PSU shipyards as compared to private shipyards which could only take away around Rs 9928 Crores worth orders which is quite miniscule. Refer Fig.

Noteworthy, between 2000-2010, nearly 95 percent of naval vessels/ships worth around Rs 76794 Crores were awarded on a nomination basis to DPSU/Public Sector shipyards. The balance 5 percent was on competition between public and private shipyards. Further, from 2011-2019, around 85 percent of naval vessels/ships worth Rs 146261 Crores were given to DPSU/Public Sector shipyards on nomination basis. The private sector participated in just 15 percent of the tenders, worth Rs 25758 Crores. In the end, private shipyards were left with 4-5 per cent of the order. Refer below given Fig.

Existing Capacity in Warship Production

As of now the DPSU/PSU shipyards have confirmed orders (including strategic projects) from the MoD worth Rs 150000 Crores. However, with a combined annual output in revenue terms of around 9000 Crores, it would take at least 15 years for them to fulfill their current order book. Given their track record of time and cost over runs in various past programmes, this figure seems unattainable. Despite this, the MoD continues to place orders on these yards. Even in a competitive scenario, they are bidding at a price that makes them the lowest bidder but whether they will be able to deliver at that price and on time is not considered by the Government. Below given The order book and major programmes with DPSU/PSU shipyards are provided in the below given Table.

A look at the above order book of the shipyards, it is clearly seen that the DPSU/PSU shipyards are loaded with orders that assure business for more than a decade to come. In contrast, the private sector has relatively diminutive orders comprising of offshore patrol vessels, training ships or like construction of submarine pressure hulls by L&T. and so on. Refer Table. The private sector shipyards have been agitating for orders on a competitive basis. It is a struggle for private shipyards to get orders in India as the window open to them is very limited.


As per Indian Navy's long term plan around 90 ships including 24 numbers of submarines are due for acquisition by 2027. Indigenous construction of these assets requires an estimated annual capacity of 107 Standard Ship Units (SSUs). The combined capacity available in the 03 DPSU shipyards is presently for construction of only 39.25 SSUs. If the requirement of the Coast Guard (160+ ships till 2020) is also included the gap in strategic warship building capacity further widens. Further, the perspective plan is structured to continue at a pace such that Navy inducts ships and submarine at an average rate of five platforms per year. This necessitates increased ship building capacity in India as the present capacity of the defence shipyard is hardly adequate to meet even half of the projected requirement.

The demand and supply gap will continue if the preferential treatment by the Government continues. For example, Goa Shipyard, which has never built a frigate or destroyer, is being entrusted to build two Russian-designed upgraded Krivak III frigates; while L&T Shipbuilding has only ever awarded an order for a single floating dock, delivered in 2017, despite the firm building many Indian Coast Guard (ICG) patrol craft and offshore patrol vessels on time. As of now, already a major chunk of orders lies with Government shipyards that are overburdened and loaded and would be unable to meet the delivery timelines. The majority of the DPSU shipyards have over utilized facilities with new building activities and as a result there is a huge backlog which needs to be catered first before constructing new vessels/ships.

The induction of various new naval vessels in coming years has become crucial in order to keep the dipping operational efficiency/numbers at a desirable level; it has become imperative for the Government to involve the private sector shipyards at a larger scale in naval ship and submarine building projects which at present has a nominal share of naval shipbuilding. These shipyards have requisite infrastructure, hi-tech facilities and have the capabilities to undertake to manufacture of world-class complex naval ships/vessels. The private sector companies are looking forward to this arena and tap the growing opportunities in the indigenous shipbuilding manufacturing base. Time has come for the Government to take necessary steps by way of introduction of new policies for the private sectors, reducing subsidies and supporting them in building/expanding infrastructure.

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