AFVOA Newsletter May 2020

Section 3 - Memoirs Newsletter No. 1 / 2020 P a g e 66 | 101 13 COVID-19: Difficult Days Ahead for Indian Privater Defence Shipbuilding Industry R Adm JS Mann, NM, VSM Genre: Business OVID19 has not only affected the people at large all over the world by propensity to spread causing thousands of fatalities but has also brought businesses and industries to a halt causing severe damage to service, hospitality and aviation industry. Though some of the industries like consumer goods, retailing and e-marketing will have a short time effect and will be able to spring back into form but major industries including infrastructure, reality, heavy engineering and mining will have a pronounced down turn in days to come. Private Defence industry particularly Shipbuilding is no exception in that because large number of external factors like political, economic and social directly impinge onto it. As such, due to preferential treatment meted out to Public Sector Enterprises in giving orders by nomination in the past (in fact 95%), it was fight for survival after investing thousands of Crores in building up infrastructure to make the lion of “Make in India” roar but this pandemic has given a life threatening blow to this industry and will have to fight back and come out of this crisis. Present Shipbuilding Scenario Indian shipyards which were looking for a revival this decade, started to falter badly against the targeted growth. The Maritime Agenda 2020 released by the Ministry of Shipping as their Perspective Plan in 2011 had set a target for India to take 5% of shipbuilding orders by 2020 but could achieve less than 0.5% of global shipbuilding orders. Government understood the impetus required for this industry and the potential available in Inland Waterways and Sagarmala projects, requirement of LNG/LPG Carriers but could not motivate the ship owners to invest. The result is evident that out of 21 smaller/larger shipyards in 2013 today we can count the survivors on our fingers and L&T Shipyard being the largest which has managed to survive and keep its head above water. As such due to limitation of CAPEX budget allocation to the Navy, major projects like LPD and 75(I) were getting delayed, RFPs were kept on hold, it was only in last six months Defence Acquisition Council/ MoD got into action and the barrier holding back other critical shipbuilding projects got lifted and RFPs started rolling giving us some hope. Indigenous shipbuilding was given the preference and out of 51 new orders, 49 went to Indian Shipyards. DPP has been revised to provide level playing field to private shipyards C