India lacks a level-playing field, says L&T Shipbuilding
L&T Shipbuilding, part of engineering conglomerate Larsen & Toubro (L&T), has said that its facility at Katuppali, near Chennai, is running at low capacity owing to a lack of a level-playing field.
The company has invested around ~40 billion to set up the facility. It is capable of manufacturing 10 ships a year, but is making only two.
“Private sector utilisation (capacity) is 20-25 per cent because the public sector is being over-fed,” B Kannan, managing director and chief executive officer, L&T Shipbuilding, told BusinessStandard. He said his company had no deficiency in technology, infrastructure capability and capacity, or financial strength. The gap is in regulation and policy, which hurts the private sector, according to him.
L&T designed the Vikramclass offshore patrol vessels (OPV) in its warship design centre at Manapakkam, Chennai, making it the first significant war ship fully designed and built in a private sector facility.
Company executives said the centre could design larger capital warships like corvettes, frigates, and destroyers.
L&T’s Hazira shipyard built the hull of the nuclear submarine INS Arihant, and is supplying hulls for its successor vessels too. “We have invested a lot, and that should give some returns. Getting enough orders is the main requirement, which is not happening owing to the absence of a level-playing field.
Demarcation should emerge on the basis of capability and demonstration, and the government is working on it,” said Kannan. Over the next 10 years, he said, the Navy and Coast Guard would require around 100 ships, of different sizes, or 10 ships every year, but there were five-six shipyards in India.
“You cannot wait for 10 years. You want the Navy and Coast Guard to be equipped with more ships. Government policies should be executed fast so that the installed capacity can be utilised,” said Kannan, a retired vice-admiral in the Indian Navy.
The government should redirect orders till public the sector finishes its jobs, according to him. Kannan said, over the past 10-12 years, around 90 per cent of the orders went “on nomination” to the public sector. Hardly 4-5 per cent came to private parties, he said.
“Public sector undertakings quote lower rates,” said Kannan, adding that the NITI Aayog’s recommendation had been to discourage nomination as a procedure. “While Make in India is a good initiative, we need to practise it,” said Kannan.
Public sector Goa Shipyard took 72 months to build an OPV, sources said. It is now delivering OPVs in 36 months, which L&T took for its first vessel, according to them. L&T won the ~13.04-billion contract to build seven OPVs in March 2015. After the Vikram class, it is supposed to deliver the remaining six OPVs in intervals of six months.
Company executives earlier said they could speed up the process if the Coast Guard accepted early delivery.
Because orders from India are few, the company has started looking at export markets, which contribute around ~7 billion.
L&T designed the Vikram-class offshore patrol vessels in its warship design centre at Manapakkam, Chennai, making it the first significant warship fully designed and built in a private sector facility