Tuesday, 15 December 2009

India: a global hub for warship building



The Project 17 frigate, INS Sahyadri, being fitted out at the Mazagon Dock, Mumbai




by Ajai Shukla
Business Standard, 15th Dec 09

Strategic circles are abuzz with rumours that the United Kingdom will soon offer India one of the new-generation aircraft carriers that it is constructing, since they are turning out too expensive for the Royal Navy to afford. Interestingly, India will almost certainly turn down the offer.

The Royal Navy had planned to build two Carrier Vessels Future (CVFs): the 65,000 tonne HMS Queen Elizabeth and HMS Prince of Wales. With the budgeted price of US $6.4 billion (Rs 30,000 crores) for the pair now apparently the cost of each, building a third and selling it abroad is an option being considered to reduce the unit price. But, in contrast to this exorbitant price, the cost of India’s 44,000 tonne Indigenous Aircraft Carrier (IAC), under construction at Cochin Shipyard Limited (CSL), is barely a third of the Queen Elizabeth. And the Indian Navy’s next IAC, a 60,000 tonne behemoth like the Queen Elizabeth, will cost less than half its British counterpart.

In the gloomy framework of Indian defence production, warship building has emerged as a silver lining. The Kolkata class destroyers, being built at Mazagon Dock Ltd, Mumbai, will cost the navy Rs 3800 crores each, one-third the global price for comparative warships. The INS Shivalik, now completing sea trials, is a world-class frigate built at Indian prices. Earlier this year, addressing an industries body, the Indian Navy’s chief designer, Rear Admiral MK Badhwar, called for making India a global hub for building warships.

While his appeal might have been tinged with strategic motivation --- a larger warship industry would bring down unit prices, providing the navy with even more bang for the buck --- there is little doubt that shipbuilders would profit more from crafting warships than from slapping together merchant vessels. India has developed the capabilities, including, crucially, the design expertise, to produce world-class warships. But the defence shipyards do not have the capacity to meet even the Indian Navy’s needs; playing the international warship market needs clear-sighted government intervention to synergise the working of public and private shipbuilders.

Building a merchant ship is a relatively cheap and simple process, from design to outfitting. Essentially it involves welding together a hull (often from imported steel) and then installing imported systems such as engines, radars, the steering, navigation and communications systems, and some specialist systems, e.g. for cargo handling. Imported components form the bulk of the cost, with little value addition within the shipyard. A commercial shipyard’s business plan revolves around bulk manufacture, compensating for the small profit margins by churning out as many ships as possible.

Creating a warship is infinitely more complex, and expensive. The design process is critical, with complex software shaping the “stealthiest” possible ship, virtually undetectable to an enemy. Next, a host of sensors and weapons must be accommodated to deal with different threats: enemy ships, submarines, aircraft and incoming missiles. Harmonising their different frequencies, and canalising information and weapons control into a single command centre, involves weaving an elaborate electronic tapestry.

Actually building the warship is a labour-intensive task, which involves painstakingly duplicating key systems so that the vessel can sail and fight even with one side blown out by the enemy. More than 400 kilometres of wiring must be laid out inside, all of it marked and accessible to permit repair and maintenance. A modern frigate has 25 kilometres of pipelines, built from 10,000 separate pieces of piping.

All this generates many jobs. An army of skilled craftsmen, many more than in merchant shipbuilding, does most of this work manually, through an elaborate eco-system of 100-200 private firms feeding into each warship. And these numbers are growing as defence shipyards increasingly outsource, using their own employees only for core activities like hull fabrication; fitting propulsion equipment; and installing weapons systems and sensors.

In this manpower-intensive field, India enjoys obvious advantages over the European warship builders that rule the market. These advantages are far less pronounced in merchant shipbuilding, where Korean and Chinese shipyards are turbocharged by a combination of inexpensive labour, indirect subsidies, and unflinching government support.

What makes India a potential powerhouse in warship building is not so much its labour-cost advantage as a strong design capability that the navy has carefully nurtured since 1954, when the Directorate General of Naval Design first took shape. The importance of design capability has been amply illustrated in the bloated CVF programme. The UK, having wound up its naval design bureau, has already paid over a billion dollars to private companies to design the aircraft carrier. And with every minor redesign, not unusual while building a new warship, the design bill and the programme cost goes higher.

India has everything it takes to be a warship building superpower: the springboard of design expertise; cheap and skilled labour; and mounting experience in building successful warships. What it lacks is capacity, which the government can augment with the help of private shipyards. This will significantly augment private shipyard revenue, boost defence exports, and provide the government with another strategic tool for furthering its interests in the Indian Ocean region.

15 comments:

Karupaswamy said...

We cannot compete with china on products that are mass produced. Instead we should choose a one of a kind product product and carve a niche market for ourselves and warship shipbuilding is a good opportunity provided we capitalize on it.

Vishnu.vyasan said...

Ajai,

The second IAC will be of 60000 tons is confirmed news?

The design capability is critical, But what our Defense shipyards should learn is to deliver in time. By the time the defense yards complete the warship, the whole design would be become obsolete. This will make IN to make more changes to the following one's and more delays.

The only thing of hope is that, they are modernizing in a big way. May be this modular construction drive will cut the construction time of the future projects.

joydeep ghosh said...

Ajai sir

all u said is good 2 ears

but first thing first

1. The last I heard IAC being built in Cochin is a 40000 DWT warship, u r saying its 44000, whos correct.

2. What abt the various kickback charges related to the scorpeone submarine deal, isnt it delaying the construction of these subs.

3. U r saying that we r putting several big pieces together to create a warship. bt to bring down the cost of warship its actually the small pieces that need to be made in India and purchased by IN.

consider the situation:

Few yrs ago, I heard that Flanges (dont remembr it sounded like that) required by IN were offered by Indian makers for Rs 3-Rs 5 a piece, but the IN went for bulgarian ones for Rs 1.06 lakhs each. (talk abt corruption n discouragement)

4. Why not employ people of other nationalities experienced in shipbuilding (russians/bulgarians/isrealis)

5. Is there a possibility of creating talent pool in warship design from IIT n Engg colleges.

6. Building a warship is one thing n maintaining a warship is another, remembr we lost just 1 ship in war but 2 ships in piece time. INS Sindhukirti is laying in the Vizag docks for the last 5 yrs n is expected to remain there 4r next 5 yrs. (talk abt wastage of resources n tax payers money)

7. India was to receive two Akula-2's but I hear we will get only one - the ex Nerpa as INS Chakra. will the 2nd one be made in India. Could you clarify?

Anonymous said...

The far-sightedness of naval planners matches the near-sightedness of our netas & babus.

Thankfully, they have been unable to damage this.

The army & the air force can well do to learn this. This will enable the Indian defense industry to meet their needs over the long-term. This will eliminate sagas like LCA & Arjun.

Anand

AKS said...

how good are we in building a nuclear Aircraft carrier?

Anonymous said...

Ajai Ji,

In some of your posts there will be truly filmy style dishum-dishum (your last post regarding french-kaveri tie-up), and some it seems have pin drop silence.

i suppose navy is as important as other services, or is it that people understand that navy having its own design beareu and highest indigenous content is considered highly mature for bloggers to comment ??

AK said...

Shuklaji is on India Shining campaign!

Anonymous said...

Looking at the cost factor the CVF class carrier will be thrice as costlier at the IAC.But will IAC be at par with CVF.Will we build IAC as lethal as CVF.
If we buy CVF there will be two benefits:

1>. A strategic shift of Naval power balance in favor of India.China will take 30 years to even come closer to India.
2.> We can learn a lot of modern technologies with from this carrier and utilize the same for the future.
3.> A small warship like shivalik is still nowhere.keeping this into account I think IAC may come in 2015 or 2017.But CVF and Gorshkov can fill the GAP

The Disadvantage is the cost.

Anonymous said...

Mr. Shukla, you are far off course in regards to the difficulties in civilian shipbuilding. Civilian shipbuilding is neither a cheap nor simple process. You cannot simply separate civilian shipbuilding and military shipbuilding into two easily distinct separate categories when they are in fact two sides of the same coins. Skills and expertise derived from civilian shipbuilding go directly into military shipbuilding.

One of the major reasons why military shipbuilding in the U.S. and the U.K. are in arrears is because their civil ship building industries have been eviscerated by economic competition. Design expertise has been lost, skilled workers have been lost, institutional advantages are decaying. This leads towards ever more expensive and delayed military projects, and not to mention reworks due to shoddy construction.

India emerging as some sort of hub for global military ship building is a pure wish fulfilling fantasy. You cannot maintain an advanced military ship building industry without an equally productive commercial ship building industry. It is simply not possible, even for navies that order as many ships as the United States.

You claim that India has everything it takes to be a ship building "superpower", but in reality, it really has nothing. India has a labor cost advantage, but not in shipbuilding which requires it's own particular set of skills that need to be constantly maintained. Skilled workers do not grow on trees and they require a large civilian sector to keep them employed during the downtime between defense projects. I have seen some of the handiwork left by Indian welders, it is nothing to boast of. They cannot compare to the quality of South Korean or Chinese workers. Shipbuilding engineers require civilian projects to keep their skills up to date and to learn new best practices to keep themselves competitive.

You also claim that India's military shipbuilding can support hundreds of companies, but this is really laughable. There is not nearly enough money involved to support that many, and small firms simply do not have the skills or capacity to execute miliary ship integration. There is a reason in the U.S. and U.K. that shipbuilding is handled by the likes of Northrup Grumman and BAE and not say Babu's ship building limited. Speaking of which, India doesn't even have the technological base to build warships on it's own as almost all critical components are imported from abroad and require foreign specialists aboard for installation. Take for example the P-17 project, the issues that cropped up installation of the General Electric LM-2500 gas turbines, or during it's outfitting, there were many Russians aboard for the installation of the radar and weapon systems, both of which naturally were imported from Russian and this required skillsets that no Indian's possessed. Think also of why anyone would turn to India for military ship building when everyone is already desperate to prop up their own ship building sectors.

The P-17 project is a perfect example actually of the limitations of Indian ship building. It has been nine years since the hull was laid down and it has still not been commissioned (it was supposed to have been six months ago). Think about it, the P-17 frigate is a mature and some would say old-fashioned design using in-service equipment and nine years later, it is still not commissioned. Even the type 45 destroyers that the UK have commissioned were considered behind schedule and above cost, even though they included radical new capabilities, were ready in little more than half that time.

No, claiming that India will be some sort of military ship building powerhouse is like claiming that your average middle aged flabby uncleji can run a whole marathon. Technically, it is possible given the limits of human physiology, but he will never lose the weight and gain the stamina to do so and him boasting of being able to do so is just that, empty boasting.

AG said...

The question is not capabiity as some users doubt. The basic problem lies in project management in our country which is pathetic. Having the opportunity to look at the defence operations as well as private sector in defence domain, I strongly feel we can be self sufficient atleast (hub - dream?). And with cos like L&T coming up with the largest shipyard, and looking at warship building, the day of "respectable" self reliance is not far. However, the shipyards will need to have a balance of commercial and defence shipbuilding order booking to make economic sense.
While some may criticise Ajay as a campaigner for India Shining, please note that it is lack of this national confidence that holds us back in our progress in all areas.

Anonymous said...

Shukla ji,I don't believe when IAC or Arihant will be inducted.6 billion will be cost to buy a new CVF which can host 40 to 50 aircraft compared to 3 billion for a refitted & OLD machine like Gorshkov which can just host 20 to 25 aircraft.So how is CVF costlier.We can't make diesel electric submarine which we need a lot but we are project we can make nuclear submarines.Can you ask the nuclear design bureau whether how good is Arihant when compared to Astute or Seawolf

Anonymous said...

Make commercial ship building tax free

Broadsword said...

Joydeep:

On the one hand, the MoD is endeavouring to build indigenous capability; on the other, you are suggesting bringing in East European engineers!

Everyone knows that building a warship is one thing and maintaining it is another. So how does that affect India's warship building programme? Are you suggesting that we stop building and focus solely on maintaining warships?

There is certainly a possibility of maintaining a talent pool of designers. But for that you need to be training many more designers than India does.

Anonymous 22:12:

You say: "You cannot simply separate civilian shipbuilding and military shipbuilding into two easily distinct separate categories when they are in fact two sides of the same coins."

They should be. In India they never have been!

You say: "Skills and expertise derived from civilian shipbuilding go directly into military shipbuilding."

They should. In India they never have! If you have evidence that civil shipbuilding in India has fed into the military programme, I would be interested in seeing it.

You say, "You cannot maintain an advanced military ship building industry without an equally productive commercial ship building industry."

Do explain how you reach that conclusion plz.

You say, "Skilled workers do not grow on trees and they require a large civilian sector to keep them employed during the downtime between defense projects. I have seen some of the handiwork left by Indian welders, it is nothing to boast of."

You've been reading up on defence economics, sure, but you've clearly been reading western authors. In India, there is no downtime. Yards are building to capacity and need more workers.

And do tell me, which warship have you seen where the welding is "nothing to boast of?"

You say, "There is not nearly enough money involved to support that many, and small firms simply do not have the skills or capacity to execute miliary ship integration. There is a reason in the U.S. and U.K. that shipbuilding is handled by the likes of Northrup Grumman and BAE and not say Babu's ship building limited."

Why the hell do you keep citing the U.K. and U.S.? When I last looked, the tricolour was still flying over Mazagon Dock and GRSE.

Actually, I have a list of 200 companies, small, medium and large, which participate in shipbuilding in Indian defence shipyards. You can keep theorising as much as you like, but it's already happening!

You write: "Take for example the P-17 project, the issues that cropped up installation of the General Electric LM-2500 gas turbines, or during it's outfitting, there were many Russians aboard for the installation of the radar and weapon systems"

You've been reading my earlier articles!! You're arguing that, since Indian warships have some foreign weapons and sensors, they are not Indian, never mind that they were designed and built in Indian yards?

It's not worth rebutting such a juvenile argument.

You write, "It has been nine years since the hull was laid down and it has still not been commissioned (it was supposed to have been six months ago)."

Do one thing! Wherever you are posting from, I'm sure there is Google there?? Well look for the story of new Indian ship designs and delays you'll get your answer.

The INS Shivalik is not a middle-aged marm. It's a world-class battleship. But, I suppose, since you've never seen it, never been on it, never analysed its integrated capabilities and never really compared it with what else is on the market, you will keep dismissing it. There is little I can do in the face of such obduracy.

There is a Punjabi saying, "Kuchh bhi keh lo, meri murgi diyan teen tanga haigiyan". That translates into "You can say anything you like, my chicken has three legs". And that, my friend, is how you're arguing.

Vivek Goel said...

It won't be a big surprise if our incompetent , foolishly selfish and shortsighted politicos let even his oppertunity pass by .

Any way I am wondering that our govt will be saying no to a brand new Aircraft carrier (AC) which might cost around 3 billion but is wasting it's time in bargaining for Russian decommissioned AC .

Even if India has paid some money to Russian why can't they scrap it and go fr a brand new one and book that money for losses or try and bargain to get mig29k for that money

I wonder with the current building capability and even if a major expansion is under taken will Indial be abe to make another AC any way before 2025.

And how is the feasibility of ramping up war ship building ablities ASAP and proposing to construct the ships for Britain. In case this is possible it can be very benifical for both the countries.

Anonymous said...

CVF will cost around $ 6 bn,not 3 bn.
that's a LOT of money !