Navy scraps ₹20,000-crore tender torpedoing local shipyards’ hopes

P Manoj Mumbai | Updated on October 12, 2020 Published on October 12, 2020

With RNAVAL in bankruptcy court, L&T arm was lone bidder; RFP fell foul of DPP/CVC norms

The Indian Navy has scrapped a long-running tender to construct four landing platform docks (LPD) worth about ₹20,000 crore in a big setback for the government’s ‘Make in India’ initiative, leaving order-starved local yards in dire straits.

Multiple sources told BusinessLine that the Ministry of Defence on September 25 cancelled the request for proposal (RFP) for the helicopter landing platform with ability to carry men, tanks and armoured carriers for the Army.

L&T Shipbuilding Ltd and Reliance Naval and Engineering Ltd (RNAVAL) were the two bidders left in the fray for the tender that has gone through several twists and turns since the RFP was issued in November 2013.

RNAVAL had partnered with France’s Naval Group while L&T had teamed up with Spain’s Navantia to construct the LPDs. Both were waiting for the outcome after submitting price bids, hoping that an order win would inject life into their order- starved yards at Pipavav in Gujarat and Kattupalli in Tamil Nadu, respectively.

Bankruptcy issue

The final blow to the tender was the decision of a lender earlier this year to drag RNAVAL to a bankruptcy court in Ahmedabad under the Insolvency and Bankruptcy Code to recover unpaid dues, rendering the Anil Ambani outfit ineligible for the contact, similar to what happened to ABG Shipyard Ltd, another qualified bidder, in 2016.

RNAVAL’s elimination landed the bidding process in a single vendor situation and fell foul of the Defence Procurement Procedures (DPP) and the guidelines of the Central Vigilance Commission (CVC).

Neither L&T nor the Navy responded to e-mails seeking comments. The resolution professional for RNAVAL, appointed by the NCLT to run the yard during the resolution process, could not be reached for comment.

The RFP was withdrawn after nine extensions and one re-submission of price bids over the last seven years.

While the cancellation of the tender is a setback to the Navy’s efforts to build LPD’s, it is also seen as an opportunity for the Navy to tap into the global advancements in technology for warship construction.

It will also help other local state-run yards such as Mazagon Dock Shipbuilders Ltd, Cochin Shipyard Ltd, Garden Reach Shipbuilders & Engineers Ltd and Hindustan Shipyard Ltd to have a go at the contract when the Navy issues a fresh tender.

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Published on October 12, 2020
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