Delay in building ships, cost escalation hit Navy’s upgradation plans

Severe cost overruns and delays have besieged defence public sector shipyards, resulting in a cascading effect on the operational preparedness and technological upgradation of the navy. The manufacture of warships continue to be delayed costing the exchequer several crores.

Defence public sector undertaking (DPSU) shipyards like Mazagon Dock in Mumbai (MDL) and Garden Reach Shipbuilders and Engineers in Kolkata (GRSE) as well as Cochin Shipyard have several ships under construction, and are currently handling four P-15B Destroyers, seven P-17A Frigates, one P-28, five Landing Craft Utility MK IV, five P-75 Submarines and five Catamaran Hull Survey vessels, among others.

Amit Cowshish, former financial advisor (acquisition) in the Defence Ministry, told BusinessLine , “The delay in completion of a project not only entails cost escalation but also upsets the capability building plans of the armed forces. This is also the case with shipbuilding projects.”

Infrastructural hurdles

The multi-billion-dollar effort to replace the navy's warship fleet has got the DPSUs battling infrastructural constraints, as well as setbacks in the development of indigenised weapons and sensors including delays in completion of trials for critical equipment.

“Considerable delays have taken place in a number of projects of the navy. These include the P-15A, P-28, Indian Aircraft Carrier, the Naval Offshore Patrol Vessels, P-75, P-17A, etc. The delays have adversely impacted the exchequer,” said a senior Defence Ministry official, speaking on conditions of anonymity.

Referring to the delay in the case of P-28, the Kamorta-class corvettes, sources in the Ministry said the contract was signed on June 11, 2012, with GRSE at ₹7852.39 crore. The delivery schedule as per contract for the anti-submarine warfare corvette Kamorta was October 2012. The actual date of delivery was July 2014, a delay of 20 months.

In the case of Kadmatt corvette, the delivery schedule was contracted for July 2013. The actual date of delivery was November 2015, a delay of 28 months. With the Kiltan corvette, the delivery date was July 2014. The ship was delivered in October 2017, a delay of 39 months. As for the Kavaratti corvette, a tentative delivery date has been scheduled in December 2018.

Similar is the case with the P-75, contracted to MDL in October 2005, which has had a cost revision. Contracted at ₹18,798 crore, the first revision of ₹23,558.58 crore was approved by the Cabinet Committee on Security in February 2010, and was later revised again to ₹25,737.44 crore and got the Committee's approval in July 2017.

Only one vessel of P-75 has been delivered so far, sources pointed out, with the lead vessel delayed by 57 months.

According to official figures placed in Parliament last month, the contract for P-15B was signed on January 28, 2011, with MDL at a project cost of ₹29643.74 crore. The likely date of delivery of the first vessel is March 2021.

In the case of P -17A, the contract was signed on February 20, 2015, with MDL and GRSE for ₹48,238.91 crore. The delivery of the lead ship is scheduled for August 2022.

Sources pointed out that in order to achieve the aspirational target of manufacturing 70 per cent of defence equipment indigenously, private shipyards need to be incentivised for the development of large scale R&D as well as manufacturing capabilities.

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