Govt issues tenders worth Rs 15,000 crore for a range of warships

This includes the ‘Buy Indian’ acquisition of six Next Generation Missile Vessels for the navy

After a significant delay caused by the general elections, the Navy on Monday issued tenders (called Requests for Proposals, or RFPs) worth over Rs 15,000 crore for a range of warships.

This includes the “Buy Indian” acquisition of six Next Generation Missile Vessels (NGMV) for the navy. Also being bought are eight Fast Patrol Vessels (FPV), 12 Air Cushion Vehicles (ACV) and eight ammunition barges for the Coast Guard.

The NGMVs, which constitute the bulk of the procurement, form an important part of the navy’s heritage and tradition. In the 1971 war, three navy missile boats had underlined the navy’s relevance with a daring missile attack on Karachi harbour that sank three Pakistani warships and set ablaze Karachi’s oil storage facility.

The NGMVs tendered are far more potent warships. In 1971, the Navy’s Vidyut-class missile boats had to be towed up to Karachi since their short range did not allow them to sail there and back. They had to expose themselves to danger by reaching within 50 kilometres of Karachi, given the 72 kilometre range of their Soviet-made Styx surface-to-surface missiles (SSMs).

The NGMVs now on order are robust, 1,500-tonne vessels with far longer operating ranges. They will be armed with Indo-Russian BrahMos supersonic cruise missiles, which can reach targets 295 km away. Making them hard to detect will be stealth features, such as low radar, infrared, accoustic and magnetic signatures.

Significantly, two private sector shipyards — Larsen & Toubro (L&T) and Reliance Naval and Engineering Ltd (RNAVAL) — were amongst those who received RFPs. This suggests the defence ministry has made up its mind that, despite RNAVAL’s shaky finances and its years of delay in building four naval offshore patrol vessels (NOPVs), the company’s shipyard at Pipavav is an asset that cannot be overlooked.

Besides L&T and RNAVAL, RFPs were also issued to the four defence public sector undertaking (DPSU) shipyards – Mazagon Dock Ltd, Mumbai, Garden Reach Shipbuilders and Engineers, Kolkata, Goa Shipyard Ltd and Hindustan Shipyard Ltd, Visakhapatnam – and to Cochin Shipyard Ltd, a Kerala state PSU that is building the navy’s first indigenous aircraft carrier, INS Vikrant.

RNAVAL’s inclusion indicates the company is likely to also participate in the Rs 50,000 crore tender for Project 75-I, which involves building six conventional submarines with air independent propulsion (AIP).

Warship building orders worth tens of thousands of crore have been on hold while the defence ministry has been deciding on RNAVAL’s eligibility to participate. The argument has centred on the minutae of procurement regulations. For example, Chapter 4 of the Defence Procurement Procedure of 2016 (DPP-2016), which deals with shipbuilding, stipulates stringent technical and financial eligibility requirements for Indian companies. It requires firms participating in tenders worth over Rs 3,000 crore to have a minimum credit rating of “A”.

Meanwhile, RNAVAL points out that Chapter 6 of DPP-2016, which covers acquisitions under the “strategic partner” (SP) model, stipulates a credit rating of only “BBB” for eligibility.

“What is the logic of demanding a credit rating of “A” for a Rs 3,000 crore shipbuilding tender, and of only “BBB” for a Rs 50,000 crore submarine tender?” says an RNAVAL executive.

RNAVAL was also granted relief last month with a new Reserve Bank of India circular granting defaulting companies more time before initiating insolvency proceedings.