Accurate Industrial Controls–KOMAC team lone bidder for a mega shipyard at Kandla

This is the first greenfield shipyard planned by the government after the Union Budget announced a slew of measures to boost the country’s shipbuilding sector. It is also the first shipyard of that scale being planned in more than 17 years, the last being the facility constructed by Larsen & Toubro at Kattupalli near Chennai in 2008.

The response to the tender was way below expectations as the Budget announcements and the government’s focus on strengthening India’s shipbuilding industry had caught the attention of shipbuilders in South Korea and Japan, some of whom even visited India in the last two months to assess the ground situation. These included top shipbuilders from South Korea such as Hanwha Ocean Co Ltd ((earlier known as Daewoo Shipbuilding and Marine Engineering Co Ltd) and HD Hyundai Heavy Industries Co Ltd as well as Imabari Shipbuilding Co.,Ltd from Japan.

Entities seeking to participate in the tender should have designed, executed and constructed a shipyard with so-called very large crude carrier (VLCC) class ship production capabilities to qualify for the auction, according to the tender terms. With no experience in shipbuilding, Accurate Industrial Controls roped in KOMAC, South Korea’s first private maritime design and engineering services company, to support its bid, the deadline for which closed a few days ago after multiple extensions of time. “The bid submitted by Accurate Industrial Controls with KOMAC as the technical partner is undergoing evaluation,” said a government official with knowledge of the matter.

Seoul and Busan-based KOMAC said on its website that it is a globally recognised design house with involvement in design and construction supervision of more than 2,000 vessels including very large crude carriers, liquefied natural gas carriers, containerships, and RO/RO ships, among others, since starting out in 1969. Accurate Industrial Controls is an engineering, design and manufacturing company catering to customers across diverse areas such as defence, AI based solutions, fluid distribution systems, automotive, IoT, embedded and power electronics, industrial automation, telecom , industrial refrigerators and renewable energy systems, the company said on its website.

Accurate Industrial Controls and KOMAC did not respond to requests for comments till the time of going to press.

In her Budget speech to Parliament on 1 February, Finance Minister Nirmala Sitharaman announced a Rs 25,000 crore Maritime Development Fund (MDF), a revamped shipbuilding financial assistance policy, credit note for shipbreaking in Indian yards and infrastructure status to large ships. Sitharaman said that exemption from Basic Customs Duty (BCD) on raw materials, components, consumables or parts used in the manufacture of ships and for shipbreaking will be extended for a further 10 years from April 1, 2025.

Shipbuilding clusters will be facilitated to increase the range, categories and capacity of ships. This will include additional infrastructure facilities, skilling and technology to develop the entire ecosystem, Sitharaman added.

Deendayal Port Authority had set a provisional reserve price of Rs 27,510 per acre/ year. The final reserve price will be intimated to the bidders at the time of pre-bid clarification or before the opening of technical bids, the port authority wrote in the tender documents.

The bidder has to offer a premium over and above the reserve price in terms of land lease rental in the auction to win the deal.

The land will be leased for a maximum of 30 years-starting from the date of handing over of possession of land-without any scope for renewal. The project does not have environmental clearance (EC) and the onus of securing the EC was put on the shipyard developer. Even if the Accurate Industrial Controls bid passes the technical and financial muster and wins the project, it will take at least 5 years before it can start operations. “The environmental clearance process itself will take a minimum of 5 years, irrespective of who does it. Whoever wins the project will have to wait for 4-5 years till it gets EC to start the work. So, for 4-5 years, whether anybody would be willing to pay the lease rent and then start the work or the port authority gives a concession, these were issues of concern to potential shipbuilders,” said a shipbuilding industry source. “That’s why, for all public-private-partnership projects, the port authorities first take EC and then float the project. Because otherwise, uncertainty becomes too much,” he said.

The shorter waterfront abutting the land housing the proposed shipyard was another concern of potential bidders, though the port authority felt that the proposed facility “will not require much of a waterfront” and the ship construction can be managed “with a slipway”. India holds less than 1 per cent of the global shipbuilding market but aims to break into the top 10 ranking by 2030 and top 5 by 2047.

Globally, more than 50,000 ships are to be built over the next 30 years as the shipping industry pivots towards green technology to cut emissions.