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The Indian Navy harbours a significant ambition: to operate a fleet of 175 to 200 warships by the year 2035. This goal is driven by the increasing need to safeguard India's maritime interests and counter growing naval activities, particularly by China, in the crucial Indian Ocean region.
However, realising this vision faces a substantial hurdle stemming from the Ministry of Defence's (MoD) longstanding preference for awarding shipbuilding contracts primarily to state-owned enterprises.
Reports, including one from 2022, suggest that the Navy's fleet expansion targets are under strain due to funding challenges and a clear government leaning towards public sector shipyards.
This bias has reportedly limited opportunities for private companies, such as the shipyard formerly known as Pipavav (now operated by Swan Defence and Heavy Industries Ltd).
There is a growing call for the MoD to reconsider this approach and more actively involve private shipbuilders in warship construction, harnessing their potential for greater capacity, innovation, and efficiency.
The current situation sees state-owned shipyards like Mazagon Dock Shipbuilders Limited (MDL), Goa Shipyard Limited (GSL), and Hindustan Shipyard Limited (HSL) receiving the vast majority of naval contracts.
An analysis indicated that out of 50 contracts reviewed, only three, valued at approximately $71.42 million, were awarded to private firms, while the remaining 47 went to public sector undertakings (PSUs).
This pattern results in PSUs handling the most critical projects, including aircraft carriers, destroyers, frigates, and advanced submarines, even though they have faced issues with project delays and budget escalations.
While experienced, state-owned shipyards operate under certain constraints. Bureaucratic procedures can slow down decision-making, and they may lag in adopting cutting-edge shipbuilding technologies like 3D printing or machine learning systems, which are rapidly advancing the industry globally, particularly in nations like China, Japan, and South Korea.
Furthermore, PSU shipyards are reportedly operating near full capacity with extensive order books, while necessary infrastructure upgrades, such as MDL's $114.3 million modernisation effort aimed at boosting production, are still ongoing and take time to yield full benefits.
In contrast, private shipyards like Pipavav and Larsen & Toubro (L&T) possess significant infrastructure and capabilities that could ease the pressure on PSUs.
Pipavav shipyard, noted as India's largest, features extensive facilities including a large dry dock, heavy-lift cranes, and a steel fabrication capacity reportedly exceeding that of the four main PSU defence shipyards combined.
Its recent successful and timely completion of vessels for the Indian Coast Guard demonstrates its operational competence. Despite this potential, private yards often find themselves underutilised for major naval warship projects.
Historically, private companies have delivered successfully when given the chance. L&T, for example, has built patrol vessels and interceptor boats for the Coast Guard at its Kattupalli facility.
While an earlier naval contract for Pipavav faced cancellation under previous management due to delays and financial difficulties, these instances underscore that private yards can perform effectively with consistent policy support and reliable contracts.
Experts argue that involving the private sector is crucial for several reasons.
Firstly, it offers increased capacity vital for meeting the Navy's current order of 66 ships (as of September 2024), a task potentially too large for PSUs alone, especially while their own expansions are underway.
Secondly, private firms often exhibit greater innovation and agility, enabling faster adoption of new technologies and facilitating partnerships with international defence companies (like Pipavav's past tie-up with France's Naval Group or L&T's with Spain's Navantia), which can be complex for PSUs.
Thirdly, empowering private defence shipbuilders strongly aligns with national initiatives like "Make in India" and "Aatmanirbhar Bharat", promising significant economic benefits through job creation and boosting the wider maritime economy.
Lastly, learning from past struggles of private shipyards, consistent government support through long-term contracts and clear policies is seen as essential for their stability and contribution.
In conclusion, achieving the Indian Navy's target of a 200-ship fleet by 2035 appears heavily dependent on leveraging the full capacity of the nation's shipbuilding industry, encompassing both public and private sectors.
The prevailing preference for state-owned yards risks constraining overall capacity and slowing innovation.
A strategic shift by the MoD towards more equitable contract distribution and fostering partnerships with capable private shipyards is viewed not just as beneficial for naval expansion, but as a necessary step to secure India's long-term maritime defence and strategic standing in the increasingly competitive Indian Ocean.
