NEW DELHI — In a departure from an earlier policy of awarding big-ticket defense programs to state-owned companies on a nomination basis, the Indian Ministry of Defence has decided to source four landing platform docks from private defense companies.
"MoD will shortly invite revised commercial bids for purchase of four LPD vessels costing around $3 billion from two shortlisted private defense companies because the price validity has expired [last month] and government-owned companies have been dropped from the program," according to a senior MoD official.
Under the 2013 tender, only two LPDs were to be built by a domestic private sector company and the remaining two vessels on nomination basis by state-owned company Hindustan Shipyard Limited.
Only domestic defense companies Larsen & Toubro and Reliance Defence and Engineering Limited, or RDEL — formerly known as Pipavav Defence and Offshore Engineering — could clear the financial and technical compliance completed last year.
Currently no defense company in India can build LPD vessels alone. To execute the LPD program, L&T has teamed with Navantia of Spain while RDEL has forged a partnership with DCNS of France.
"The validity date for the tender has expired and the number of extensions that could be asked for from [the] Defence Procurement Procedures (DPP) perspective have also lapsed. Thus, MoD has no option but to ask for a fresh commercial bid," the senior MoD official said.
Welcoming the move to give all four LPD orders to private sector companies, Anil Jai Singh, a defense analyst and retired Indian Navy commodore, said: "Given the full-capacity order book with the government-owned shipyards, it is a welcome and long overdue step to bring the private shipyards into the shipbuilding mainstream with a substantial order which makes it worth their while."
Ankur Gupta, a defense analyst with Ernst and Young India, held a similar view. "This is a great opportunity for the Indian private defense companies to receive an order that is comparable in terms of numbers to what the public sector defense companies has been receiving over the past decades."
However, one Indian Navy official said the service fears that "private companies could underquote fresh commercial offers in desperation to win the order and eventually not deliver the vessels on time."
In response, the MoD official admitted: "Yes, there is a distinct possibility for such an eventuality."
The selected private shipyard will be asked to deliver the first LPD in eight years and subsequently other vessels in a time frame of two years thereafter, according to the Indian Navy official.
The LPD vessel is expected to accommodate 1,430 personnel and be equipped with a point-defense missile system, a close-in weapon system, an anti-torpedo decoy system, a chaff system, and heavy and light machine guns. In addition, helicopters up to 35 tons are expected to be able to operate from the vessel.
The Indian Navy currently operates only one LPD — the former U.S. Navy Austin-class amphibious transport dock Trenton, acquired in 1997 and renamed INS Jalashwa.
"The Indian Navy needs the LPDs most urgently to meet the strategic and tactical requirements for protecting the Indian Ocean region island territories and the territorial waters," the Navy official said.
Vivek Raghuvanshi is the India correspondent for Defense News.
