India’s new aircraft carrier, INS Vikrant (named after India’s first carrier), has bust its budget by 600 per cent. It will now cost a whopping nearly Rs. 19,000 crore instead of the original estimate of about Rs. 3,000 crore.
The warship, India’s first home-built aircraft carrier, is presently being fitted out in Kochi and will be the Navy’s flagship once it enters service in a few years.
According to a report given to Parliament by its Standing Committee on Defence, “In the case of aircraft carrier ‘Vikramaditya’, there had been huge cost escalation due to repeated time extensions. These time and cost overruns in almost all the projects is a major cause of concern. For long, (the) country’s defence needs have been lying unattended and huge gaps have emerged in Force Level. It’s high time that adequate budgetary support is made along with necessary operational reforms at shipyards and other construction sites.”
According to the Standing Committee’s report, three major indigenous warship programmes are collectively a whopping Rs. 29,000 crore over budget.
The three destroyers of the Project 15 class, the first of which, INS Kolkata, has just been commissioned, are about Rs. 8,000 crore over-budget. Similarly, corvettes of the Project 28 class, which are being constructed at Garden Reach in Kolkata, will cost about Rs. 8,000 crore instead of Rs. 3,000 crore.
There are several reasons why these cost and time over-runs are taking place. According to the parliamentary committee’s report, construction costs for the Kolkata Class destroyers went up because Mazgaon Docks, Mumbai, where the ships were meant to be built, was already constructing other ships. With a delay in the construction of the ships, the cost of materials went up and there was also a delay in the supply of warship-grade steel from Russia along with higher labour costs. Further, the identification and assessment of the costs of weapons and sensors was also delayed and the revised estimated was well over-budget.
Similarly, in the case of the Project 28 corvettes, there was a delay in producing indigenous warship-grade steel, the development of which became a priority because of the massive costs associated with importing this grade of steel from traditional exporters such as Russia. The new, indigenous replacement, developed by the Steel Authority of India was complex to handle and required new techniques in welding. With a further delay in conducting trials of various systems from competing firms, the overall project costs escalated because of an increase in development costs and the decision to use new, state-of-the-art systems.
Construction of the new aircraft carrier Vikrant also suffered because of the non-availability of warship -grade steel. Also, new technologies in constructing aircraft carriers had to be mastered. According to the Standing Committee Report, there was “inadequate domain knowledge” in carrier construction along with the emergence of new technological advances and new generation equipment which needed to be factored in. Most importantly, the report identifies that the government’s sanction for the complex project in 2002 came “at a time when the form & fit (of) the warship was still emerging.”
The Standing Committee Report points to glaring lapses in the pace of indigenous warship construction particularly at a time when the Chinese Navy is growing at a very fast pace by inducting an entirely new generation of destroyers, corvettes and frigates. To match this, the Indian Navy needs to desperately induct new warships at a faster pace. In 2012, the government’s Defence Acquisition Committee had approved 198 ships and submarines for the Indian Navy. The present force level is 127 ships and 15 submarines.