Saturday, 22 April 2017

South Korea storms into India's defence manufacturing with contracts worth $2.3 billion

Bags deals for building warships and tracked artillery in India. Another Rs 30,000 crore buy of minesweepers likely this year

By Ajai Shukla
Business Standard, 22nd April 17

Since the turn of the century, six arms suppliers have dominated India’s defence imports --- USA, Russia, Israel, France and the UK. Now, a muscular new player, South Korea, is storming this lucrative club.

On Friday, in New Delhi, the governments of India and the Republic of Korea (or RoK, as South Korea is called) signed a memorandum of understanding (MoU) for joint shipbuilding, which clears the decks for cooperatively building five fleet support ships (FSS) for about Rs 10,000 crore.

These FSS will replenish ammunition, fuel, food and supplies to navy flotillas operating far from their bases. The RoK wants to build one FSS in Korea, and four in Hindustan Shipyard Ltd, Visakhapatnam (HSL), while New Delhi is pressing to build all five in HSL.

Separately, Indian company, Larsen & Toubro (L&T) earlier on Friday signed a contract with RoK firm, Hanwha Techwin, for jointly building in India 100 self-propelled artillery guns, worth Rs 5,000 crore.

Meanwhile, for an even bigger production order worth about Rs 30,000 crore, Goa Shipyard Ltd (GSL) is in advanced negotiations with South Korea’s Kangnam Corporation for building 12 mine counter measure vessels (MCMVs) in Goa. In Delhi on Tuesday, the navy’s warship acquisition chief, Vice Admiral DM Deshpande, said that deal too could be concluded this year.

“By the fourth quarter of this year, we should be in a position to have pen to paper so far as this [MCMV] project is concerned”, said Deshpande.

That would involve South Korea in defence production contracts worth 45,000 crore. However, a significant part of that money would flow to Indian production agencies.

The K-9 Vajra-T gun that L&T and Hanwha Techwin will build together is a 155-millimetre, 52 calibre gun, mounted on a tracked, armoured vehicle. Artillery units equipped with this highly mobile gun will be a part of the army’s strike corps, whose tank spearheads need artillery guns that can keep pace with them.

“L&T plans to begin production of this vital weapon system at its Strategic Systems Complex at Talegaon near Pune in Maharashtra and deliver the first batch of 10 guns [from Talegaon]. L&T also has initiated setting up of a greenfield manufacturing line at Hazira, Gujarat, integral with a state-of-the-art test track, to produce, test and qualify the K9 Vajra-T guns”, stated Jayant Patil, chief of L&T’s defence business.

L&T committed on Friday that it would not just build the Vajra in India, with over 50 per cent indigenous content, but also provide the army through-life support.

The defence ministry is especially pleased with the shipbuilding MoU, which is likely to galvanise Hindustan Shipyard Ltd (HSL) that would build the FSS in partnership with a reputed RoK shipyard, probably part of Hyundai Heavy Industries (HHI).

Officials expect that HSL, a government-owned shipyard that was transferred from the ministry of shipping to the defence ministry in February 2010, will now have the high value orders and expertise needed to put it on a firm financial footing.

A key component of the RoK-India MoU is the agreement for Seoul to nominate a South Korean shipyard to “upgrade and modernise [HSL’s] facilities and execute naval shipbuilding projects in a timely and cost effective manner”, according to a defence ministry release on Friday.

After years in the red, HSL’s chief, Rear Admiral Sarath Babu (Retired), revealed this week that HSL would, for the first time, make an operating profit of Rs 30 crore, on a turnover of Rs 625 crore in 2016-17.

Interestingly, the FSS order will be the second cooperative project between HSL and a RoK shipyard. In the early 1990s, HSL and Korea Tacoma cooperated to build seven offshore patrol vessels (OPVs) of the Sukanya class. Three of these OPVs were built in Korea and four in HSL, and all are still in service.

One of the Sukanya-class OPVs built in HSL, INS Sarayu, was sold to the Sri Lanka Navy, where it continues to perform the role of navy flagship, now named Sayura.

Defence cooperation with RoK is backed by a burgeoning political engagement between New Delhi and Seoul. In May 2015, when Prime Minister Narendra Modi met the (now impeached) RoK president, Park Geun-hye in Seoul, the two countries upgraded their relationship to a “Special Strategic Partnership”. Modi also visited Hyundai Heavy Industries shipyard during that trip and expressed his hope that Korean expertise could benefit Indian shipyards soon. 

6 comments:

Anonymous said...


South Korea has progressed a lot in engineering during last few decades. They did not use their engineering talent to provide back office to western nations. They preferred to build own brands to compete and beat the best in the world. Our educational institutions and industries need to learn hard work and dedication from them .
it has been one of the most efficient ship builders . It is good to see India learning from them rather than a eurean yard .
It is also good to see HSL finally turning around , hope this turn around is for good.
What happened to the mine sweeper deal that was aborted some time back ?

Anonymous said...

@ anonymous 10.46

The minesweeper project with kangnam is on track and should be inked by the year end

Anonymous said...

There is nothing that SK does in defence that India does not have the capability to do. Missed opportunity for "Make in India". The kickbacks must be generous

Guru said...

ARDE-Pune is already building 2 versions of 155mm guns-one 45 calibre and one 52 calibre. I believe both are currently in testing phase. The indigenous 155mm/45 calibre Dhanush howitzer is in production for a 140 gun order at ~15 crore/gun. 1st batch of 12 guns have been delivered. Pray tell me why we are paying 100 crore/gun for RoK 155mm/52 calibre guns?

As a defence journalist, why don't you ask these questions, Ajai? Someone is really making kickback money here.

Broadsword said...

@ Guru

Since you seem to have officiously appointed yourself the Lok Pal of India, and think nothing of splashing allegations all around, at least get your facts right.

ARDE Pune is making just one gun --- the 155 mm 52-calibre ATAGS. Take the trouble to read about it on my blog. A second gun is being built by OFB --- the 155 mm 45 calibre Dhanush. Read about that also on my blog. THere's a search facility, but that might be too much trouble. Levelling allegations is easier.

What we are buying from the Koreans is a self-propelled gun howitzer. That is a totally different ball game from the other two guns. Also read about that on my blog.

To get your corruption hormones jumping even higher, we are also buying 145 ultralight howitzers from BAE Systems. The blog has many articles on that too. Take the trouble to read those too.

We could probably buy two more types of guns. Everything that goes BANG does not serve the same purpose. Read about that too on my blog.

And stop posting foolish comments until you learn something about the military.

Much obliged.

Anonymous said...

I agree with you, totally.