Summary
Cochin Shipyard and Hindustan Shipyard have been asked to carry out feasibility studies and help build two new shipyards, but being government organisation they may not have enough freedom to do justice to the project.
Analysis
The factors governing ports and shipbuilding industry are totally different. Hence, empowering ports to implement shipyard plan was not a correct decision. Tenders were invited from consultants to advise ports on location identification and feasibility report of shipyard. Several shipbuilding consultants did not bid for it, as there was lack of clarity on the consultant’s role and work content. There was only one bid received by Mumbai Port Trust. Two years have passed since the tenders were invited, no progress has taken place. Other failures of similar case are Shiprepair projects of Cochin Port Trust and Kandla Port Trust both run by Ministry of Shipping.
The responsibility to coordinate setting up two International Shipyards has now been given to two commercial shipyards namely Cochin Shipyard and Hindustan Shipyard, managed under Shipping Ministry. The dynamics of shipbuilding is quite complex. In such a scenario, the shipyard developer has to be flexible and swift in decision making. It is difficult for a state run firm in India to take quick decision, to change a decision if it has gone wrong and troubleshoot in case of unforeseen circumstances arrive. The proposed two shipyards are part of National Maritime Development Program (NMDP). The shipyards have to be setup through public private partnership (PPP). It is a part of government’s initiative to augment port capacity.
The time frame from concept to commissioning of a shipyard could take three to five years in an ideal case. Several large Greenfield shipyard projects are being implemented in India by private companies such as ABG Shipyard, Bharati Shipyard, Larsen & Toubro Limited and Pipavav Shipyard Limited are being setup in the said time frame. In addition, half a dozen small shipyards have comeup or are being developed in India. Government bodies do not have the required freedom to take innovative and quick decision, this delays the process.
By the time feasibility report is finalised, a private developer would start newbuilding activity. Government should ask consultants to identify a suitable location and invite bids from the shipyards to develop shipbuilding facility on Public Private Partnership model. Involving Cochin Shipyard and Hindustan Shipyard is like adding one more window of clearance in the existing list.
Anand Sharma consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
