Govt to help financially stressed private shipyards to take up defence contracts

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Manohar Parrikar says defence ministry will sign a memorandum of understanding with shipping ministry to allow private shipbuilders have a fair share in defence shipbuilding.

India’s shipping and defence ministries are working on a plan to help financially stressed private shipyards that are undergoing corporate debt restructuring (CDR) to take up defence contracts. 

Defence minister Manohar Parrikar said that his ministry will sign a memorandum of understanding (MoU) with the shipping ministry to allow private shipbuilders have a fair share in defence shipbuilding. 

Parrikar said the current defence procurement policy (DPP) prohibits financially stressed private shipbuilders from participating in defence tenders.

The minister said the shipping ministry can extend support to private ship building companies in defence production. 

Banks could come on board along with the shipping ministry to suggest ways and means to accommodate private shipyards, he added.

However, this is a plan of action and ministries are yet to finalise details. “This is just a recipe. We cannot tell you how the food will taste,” 

Parrikar said.Bharati Defence & Infrastructure Ltd and ABG Shipyard Ltd, two of India’s private shipyards, are both facing acute financial stress. 

“Such a move (to disallow stressed shipbuilders from participating in defence tenders) does not make sense,” says V. Kumar, managing director of Bharati Defence & Infrastructure, which changed its name from Bharati Shipyard Ltd after it secured a permit from the government to build defence ships. 

“When Prime Minister Narendra Modi is going all out to support Indian shipbuilders, this move will hinder the revival plans of many yards,” he said.

Source: Livemint