CAG Report Exposes Pitfalls in Naval Warship Projects and State-Run Shipyards

Posted on: March 24, 2011

http://www.defencenow.com/news/112/cag-report-exposes-pitfalls-in-naval-warship-projects-and-state-run-shipyards.html

The Indian Navy’s flagship projects, including the building of Shivalik class frigate, Kolkata class destroyer and Kamorta class anti-submarine warfare corvettes, have all attracted severe criticism with the findings of the Comptroller and Auditor General (CAG) and its latest report tabled in the Parliament. 

CAG, a leading Indian audit watchdog, has exposed the almost farcical nature of these naval projects and the lack of foresight and synergy between the Defence Ministry, Indian Navy and the state-owned shipyards in carrying out crucial indigenous projects in the country. 

The latest CAG report points out that India’s plan to build indigenous warships have been constantly derailed by time and cost overruns. CAG has noted that the Shivalik project cost has gone up by 240 per cent and the Kolkata class destroyers have become costlier by 226 percent. In effect, these two projects are expected to cost $ 4.39 billion as opposed to the initial $ 1.29 billion. CAG has added that these colossal hikes have been the result of constant fiddling with the warship design besides the decrepit infrastructure and shoddy work culture of the public-sector shipyards. 

In fact, state-owned Mazagaon Dock Limited (MDL) has been accused of including arbitrary costs arising from non-admissible items to the warship construction project, in turn causing unreasonable cost escalation. MDL has delivered only one frigate as opposed to the three it was supposed to deliver as per schedule. Both the major naval projects, including Project-17 to build three 4,900-tonne Shivalik-class stealth frigates and Project-15A to construct three 6,500-tonne Kolkata-class destroyers, are five years behind schedule at MDL.

The CAG report has indicated that Project-28 involving the construction of four 2,400-tonne anti-submarine warfare corvettes at the Garden Reach Shipbuilders and Engineers Ltd (GRSE) at Kolkata is facing similar problems. Till date, only one frigate (INS Shivalik) has been commissioned as against the expected nine warships by August 2010.

The CAG report findings have highlighted the fact that cost escalation with the passage of time has not been taken into consideration. As a result, the actual costs of all these projects will be even higher since the projects are still in progress. Besides, the time-overrun will only have a negative impact on the Indian Navy since timely induction of crucial military assets will not occur. The CAG report points out that by year 2012, the Indian Navy’s frigate strength would reduce to 61 percent. Also, it would lose more than half of its destroyers and 80 percent of corvettes, meaning the Indian Navy may retain only 44 per cent and 20 per cent of the envisaged force levels for destroyers and corvettes.

The ill-planned work mode and the overloaded state-run shipyards would never be able to plug the gap in the shortfall of frigates, corvettes and destroyers in the naval fleet. The Indian Navy is also facing problems with its submarine fleet which an earlier CAG report has already highlighted.