The excessive delays and cost escalation in various homegrown warship building exercises of Indian Navy has been brought to the notice of the Indian Parliament. The key projects plagued by delays and cost escalation include the Project 15A involving the Kolkata -class guided missile destroyers, Project 17 involving the Shivalik -class stealth frigates and Project 28 involving the Kamorta -class Anti-Submarine Warfare (ASW) corvettes.
As per the details given to the Indian Parliament, the cost escalation in these projects has been about 225 per cent for Project-15A, about 260 per cent for Project-17 and about 157 per cent for Project-28. The reasons that have been cited include the complex nature of warship building process, delays in finalization of structural drawings, absence of timely availability of steel and inadequate infrastructure. The programmes in jeopardy include the Project 15A for building three 6,500 tonne frigates, Project 17 for three 4,900 tonne frigates, and Project 28 for four ASW Corvettes.
Regarding the Project-15 A involving the Kolkata-class guided missile destroyers, the reason for cost escalation includes delay in supply of warship building quality steel by Russia. Besides, there has been escalation due to increase in expenditure towards services of Russian specialists on account of inflation during the build period. As for the Project-17, the reasons contributing towards cost escalations include delay in supply of warship building quality steel by Russia, delay in acquisition of weapon equipment from Russia and delay in finalization of propulsion equipment. The delay in decision is caused considering the complex combined diesel and gas arrangement being created for the first time in an Indian Navy frigate.
While there was undue delay in the conclusion of contracts for Project-17 and Project 15A, the contract for the Project-28 was not even signed even after seven years of the commencement of the project. Regarding Project-28 which involves ASW Corvettes, Indian Navy was using D40S/B-quality high tensile strength steel for construction of warship. But due to steep import costs, indigenously developed DMR 249A steel was decided to be used on Project-28 ships. However, there was delay in development of indigenous steel and associated complexities related to development of new weld consumables and welding techniques. Added to this, inability to identify a suitable propulsion package to meet stealth requirement of ships and delay in development of indigenous weapons and sensors also resulted in cost escalation. It must be noted that the contract for the Project-28 was not signed till June 2010 even though the letter of intent was signed in March 2003.
The Indian Navy’s projects have come under scanner for its substantial time and cost overruns before. In a Comptroller and Auditor General of India (CAG) report earlier this year, Indian Navy’s methodology for estimating the cost of ships came under severe criticism. The CAG report indicated that the methodology has resulted in unrealistic approvals for funding projects with every likelihood of cost growth at the time of project itself. In fact, it has even resulted in reduced naval force levels and mega price escalation in its key projects. The CAG report has also pointed out that by 2012, the Indian Navy may retain only 61 per cent, 44 per cent and 20 per cent of the envisaged force levels of frigates, destroyers and corvettes respectively. The lead ship in all the projects is being delivered or expected to be delivered only after a delay of four to five years from the original date.