The Centre on Thursday decided to close down the 68-year-old Hindustan Shipyard that is an important component of economy of the coastal city of Visakhapatnam. The decision comes as yet another blow to Andhra Pradesh, which is yet to recover from the December 9 midnight Telengana shock.
The shipyard is to be transferred to the Defence Ministry and the Ministry of Shipping has been asked to look for another location to set up a new shipyard for repairing and building merchant ships.
Information and Broadcasting Minister Ambika Soni announced the transfer of the Vizag shipyard to the Defence Ministry for meeting 'national security requirements of building strategic vessels for the Indian Navy'.
She told media persons after a Union Cabinet meeting that the Ministry of Shipping has been given an 'in principle' approval to set up a new shipyard of international standard to meet the merchant shipping requirements.
Though she did not take questions on whether the sudden decision will adversely affect Visakhapatnam people and the shipyard workers, sources said the shipyard will now be converted for exclusive use of the Indian Navy to build six new generation submarines.
The Cabinet decision does not spell out the mode of transfer of the shipyard to the Defence Ministry nor does it set a deadline for the new merchant ship repair and building shipyard to be established.
Port Traffic: Since new submarines are to be built under top secrecy and security, there may also be curtailment of some of the activities of the Visakhapatnam port, which boasts of the highest cargo handling among all Indian ports and berthing of as many as 2347 vessels in 2008-09.
Closure of the shipyard may also affect the traffic received by the port, as vessels berthing there will have no facility nearby for the usual repairs undertaken while at the port for loading and unloading cargo.
The Indian Navy has been pestering the government to provide it a domestic shipyard to build the second line of submarines under a Rs 30,000-crore programme. Its Rs 18,798-crore Scorpene project (P75) to build six submarines is already underway, though at a very slow pace, at the Mazagaon Docks in Mumbai.
Only on Tuesday, the Defence Acquisitions Council had adopted a resolution to acquire the Vizag shipyard. Defence Minister A K Antony who chaired the council meeting on Thursday secured the Cabinet's nod to the proposal.
There may be hardly any work at the shipyard after its transfer to the Defence Ministry as sources said it will take five years for the Project-75I to be launched as work starts only after the government ties up with one of the four foreign manufacturers to build the new
Rosoboronexport (Russia), DCNS/Armaris (France), HDW (Germany) and Navantia (Spain) have been shortlisted for the purpose but the Defence Ministry could not pursue further until it gets a shipyard to negotiate and finalise the deal.
Urgency: Sources said Defence Minister AK Antony pressed for an immediate transfer of the Vizag shipyard, pointing out that the Mazgaon shipyard is already running two years behind schedule and any further delay in allotment of a shipyard, public or private, for the next project will badly hit India's defence preparedness on sea.
He stressed that the Vizag shipyard has been found to be the best, both in terms of location and equipment.
According to his submission, India will be left with only nine out of present fleet of 16 submarines by 2012 and the number will further go down to just five by 2015 and that too at a time when China and Pakistan in the neighbourhood are rapidly increasing their underwater muscle.
China is estimated to have 62 submarines, including 10 of them nuclear powered while Pakistan has added three French submarines lately to its fleet and is trying to get three more from Germany.
Both Project-75 and 75I are part of the 30-year submarine-building perspective programme approved by the Cabinet Committee on Security a decade ago. The basic aim was to acquire indigenous capability in design, development and construction of submarines, with a total of 24 submarines to be manufactured in a phased manner.