Indian warships’ costs escalate over 225%

The production of warships for the Indian Navy has faced considerable delays and a cost escalation of around 225 per cent in the case of the Kolkata-class destroyers and 260 per cent in the case of Shivalik-class frigates.

The Indian Defense Minister Arackaparambil Kurien Antony informed the Lower House of Parliament on Monday that the two major warship construction projects running behind schedule, the Project-15A (P-15A) Kolkata-class guided missile destroyers and the Project-17 (P-17) Shivalik-class have been delayed and are bearing the brunt of significant cost escalations.

Antony said the escalation for the Project-15A-class has been ‘about 225 per cent’. He cited the reasons for the delays and increase in costs for this class to include, ‘delay in supply of warship building quality steel by Russia, escalation due to increase in expenditure towards services of Russian Specialists on account of inflation during the build period, impact of wage revision due from October 2003 and finalization of cost of weapons and sensors’. The three destroyers are scheduled to be delivered by March, 2012, March, 2013 and March, 2014 respectively.

The escalation has been 260 per cent with respect to the Project-17 Shivalik-class frigates. According to Antony, the reasons are similar. He cited ‘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 in view of complex combined diesel and gas arrangement introduced for the first time in Indian Navy frigate’, as reasons for the escalation. While two of the P-17 frigates have been commissioned in April, 2010 and August, 2011 respectively, the third frigate is expected to be commissioned in early 2012.

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Project-15A Kolkata-class guided missile destroyers

Cost: INR 11662 crore

INS Kolkata: March, 2012
INS Kochi: March, 2013
INS Chennai: March, 2014

Project-17 Shivalik-class frigates

Cost: INR 8101 crore

INS Shivalik, delivered: April, 2010
INS Satpura, delivered: August, 2010
INS Sahyadri: Early 2012

P-15B (follow on to the P-15A Kolkata-class) destroyers

Cost: INR 29345 crore

July, 2018
July, 2020
July, 2022
July, 2024

Follow on Talwar-class (Krivak III variant) frigates

Cost: INR 5514 crore

INS Teg: April, 2012
INS Tarkash: September, 2012
INS Trikand: June, 2013

Note: 1 crore = 10 million
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Mazagon Dock Limited (MDL) is building three P-17 (Shivalik-class) frigates, three P-15A (Kolkata-class) destroyers and four P-15B (follow on to the P-15A Kolkata-class) destroyers. The contract for the four P-15B (follow on to the P-15A Kolkata-class) destroyers was signed last January and the delivery schedule is July, 2018, July, 2020, July, 2022 and July, 2024 respectively.

Antony also said the three follow on Talwar-class frigates ordered from Russia and due to be delivered in April, 2011, October, 2011 and April, 2012, have also been delayed by 12 months, 11 months and 14 months, respectively. Since this is a fixed price contract, there is no escalation in the cost of these ships due to the delays.