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Russia partners with Pipavav Defence to build Grigorivich frigates in India

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New Delhi, (IANS): With India close to choosing Grigorivich frigates for its navy, Russia is partnering with Anil Ambani-led Pipavav Defence to build these ships under Prime Minister Narendra Modi’s “Make in India” initiative, official sources said on Thursday.

They will be upgraded versions of Talwar-class ships, or the Russian equivalent of Krivak-III.

Photo Credit-Indian Defence News
Photo Credit-Indian Defence News

Confirming this to IANS, at least two senior defense officials said a team from Russia evaluated three or four private and state-run shipyards as they were keen on an Indian partner if the ships were to be built in India. This will be a pre-condition for the order valued at $3-$3.5 billion.

The sites evaluated were Pipavav’s yard in Gujarat, Larsen and Toubro’s unit at Ennore, and the state-run Cochin Shipyard in Kerala. Pipavav, a majority stake in which was acquired by the Reliance Group a few months ago, emerged the winner.

“The Prime Minister’s Office is closely watching the development,” one of the two officials told IANS. “This is likely to be an order that will be placed on the Government of Russia by our government.”

Incidentally, the development comes against the backdrop of the Navy vice chief, Vice Admiral P. Murugesan, stating on Tuesday that India was exploring the possibility of getting upgraded Talwar-class ships and was in talks with Russia for its Grigorivich frigates technology.

“As per our maritime perspective plan, we have to build a certain number of ships in a certain time. We are exploring the possibility to expedite the acquisition of certain number of ships,” Murugesan told reporters here. “But this will not be an import. It has to be made in India.”

The idea is to have a 198-ship force by 2027, up from the current 137 vessels.

India has been stressing on domestic defense production under the “Make in India” program, an important aspect of which is to get technology transfers and inviting foreign firms to manufacture in India.

The Grigorivichs are improved variants of the six Talwar-class frigates the navy obtained between 2003 and 2013. The maritime capability perspective plan of the Indian Navy envisages a 198-ship force by 2027, up from the current 137 vessels.

Already, 48 warships are currently under construction at Indian shipyards, including aircraft carriers, frigates, destroyers, submarines, corvettes, and fast attack craft.

In March, the Reliance Group had announced its acquisition of a 18-percent stake from the then promoters of Pipavav Defence, apart from a 26-percent mandatory open offer.

Pipavav’s facility is at the location by the same name on the Gujarat coast and claims modern, versatile engineering, and fabrication facilities with shipbuilding infrastructure that is also suitable for the construction of a wide range of warships and submarines.

The company is said to be a strong contender for a tender, potentially worth Rs.60,000 crore, to build six advanced submarines for the navy along with five other private and state-run firms such as Larsen and Toubro, Pipavav Defence, and the state-run Mazagon dockyard.

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How telecom has become driver of economic change in India

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The country's hyper-competitive telecom sector has led the revolution from the front.
The country's hyper-competitive telecom sector has led the revolution from the front. Wikimedia Commons
  • India has done well to stay ahead of the curve in the technological revolution
  • The sectoral change in productivity has been the highest in the telecommunications sector since the reforms of 1991
  • India has managed to provide the cheapest telephony services around the world

For the most part of human history, the change was glacial in pace. It was quite safe to assume that the world at the time of your death would look pretty much similar to the one at the time of your birth. That is no longer the case, and the pace of change seems to be growing exponentially. Futurist Ray Kurzweil put it succinctly when he wrote in 2001: “We won’t experience 100 years of progress in the 21st century – it will be more like 20,000 years of progress (at today’s rate).” Since the time of his writing, a lot has changed, especially with the advent of the internet.

India has done well to stay ahead of the curve in the technological revolution. The country’s hyper-competitive telecom sector has led the revolution from the front. In fact, according to Reserve Bank of India data, the sectoral change in productivity has been the highest in the telecommunications sector since the reforms of 1991, growing by over 10 percent. On the other hand, no other sector has had a productivity growth of above five percent during the same period. It is no wonder that it has also been one of the fastest-growing sectors of the Indian economy, growing at over seven percent in the last decade itself.

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Such an unprecedented pace of growth has been brought about the precise levels of change that Kurzweil was so enthusiastic about. Today’s smartphones have the power of computers that took an entire room in the 1990s, and the telecom sector has had to keep up with a provision of commensurate internet speeds and services. Meanwhile, India has managed to provide the cheapest telephony services around the world, which has hit rock bottom after the entry of Reliance Jio. This has ensured access to those even at the bottom of the pyramid.

A rise in internet penetration has distinct positive effects on economic growth of a country.
A rise in internet penetration has distinct positive effects on economic growth of a country. Wikimedia Commons

Even though consumers have come to be accustomed to fast-paced changes within the telecom sector, the entry of Jio altered the face of the industry like never before by changing the very basis of competition. Data became the focal point of competition for an industry that derived over 75 percent of its revenue from voice. It was quite obvious that there would be immediate economic effects due to it. Now that we’re nearing a year of Jio’s paid operations, during which time it has even become profitable, we saw it fit to quantify its socio-economic impact on the country. Three broad takeaways need to be highlighted.

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First, the most evident effect has been the rise in affordability of calling and data services. Voice services have become practically costless while data prices have dropped from an average of Rs 152 per GB to lower than Rs 10 per GB. Such a drastic reduction in data prices has not only brought the internet within the reach of a larger proportion of the Indian population but has also allowed newer segments of society to use and experience it for the first time. Since the monthly saving of an average internet user came out to be Rs 142 per month (taking a conservative estimate that the consumer is still using 1 GB of data each month) and there are about 350 million mobile internet users in the country (Telecom Regulatory Authority of India data), the yearly financial savings for the entire country comes out to be Rs 60,000 crore.

To put things in perspective, this amount is more than four times the entire GDP of Bhutan. Therefore, mere savings by the consumer on data has been at astonishing proportions.

Today's smartphones have the power of computers that took an entire room in the 1990s, and the telecom sector has had to keep up with a provision of commensurate internet speeds and services. Wikimedia Commons
Today’s smartphones have the power of computers that took an entire room in the 1990s, and the telecom sector has had to keep up with a provision of commensurate internet speeds and services. Wikimedia Commons

Now, this data has been used for services that have brought to life a thriving app economy within the country. So, the second level of impact has been in the redressal of a variety of consumer needs — ranging from education, health and entertainment to banking. For instance, students in remote areas can now access online courseware and small businesses can access newer markets. Information asymmetry has been considerably reduced.

Third, a rise in internet penetration has distinct positive effects on economic growth of a country. These effects arise not merely from the creation of an internet economy, but also due to the synergy effects it generates. Information becomes more accessible and communication a lot easier. Businesses find it easier to operate and access consumers. Labour working in cities has to make less frequent trips home and becomes more productive as a result. Education and health services become available in inaccessible locations. Multiple avenues open up for knowledge and skill enhancement.

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An econometric analysis for the Indian economy showed that the 15 percent increase in internet penetration due to Jio and the spill-over effects it creates will raise the per capita levels of the country’s GDP by 5.85 percent, provided all else remains constant.

Thus, India’s telecom sector will continue to drive the economy forward, at least in the short run, and hopefully catapult India into 20,000 years of progress within this century, as Kurzweil postulated. The best approach for the state would be to ensure the environment of unfettered competition within the industry. Maybe other sectors of the economy ought to take a leaf out of the telecom growth story. The Indian banking sector comes to mind. However, that is a topic for another day. (IANS)

(Amit Kapoor is Chair, Institute for Competitiveness, India. He can be contacted at Amit. Kapoor@competitiveness.in and tweets @kautiliya. Chirag Yadav, a senior researcher at the institute, has contributed to the article.)