Indian Shipbuilding in the Global Context: An empirical study on

current state of industry and exploring scope for improvement

Joshin John,* Vijaya Dixit,* and Dr. Rajiv K. Srivastava†
* PhD Student, Operations Management, Indian Institute of Management, Lucknow
† Professor, Operations Management, Indian Institute of Management, Lucknow

Abstract

This paper is about the current state of shipbuilding industry in India, the major problems in
domestic shipyards and exploring methods to improve the situation. The paper starts with the
importance of shipbuilding as an industry, its close association with manufacturing and
development of other ancillary industry and its need especially in the Indian context. We then
discuss the various policy issues such as taxes, duties and subsidies and how it impacts Indian
shipbuilding. Further, we study the growth and competition within the domestic shipbuilding
sector with Porter‟s Five Forces framework and assess the strength and weaknesses of
shipyards operating in different market segments. The paper, then delves into the operational
aspects such as planning and scheduling, product strategy, design, production, supply chain
management, shipyard layout, construction method etc. In each section, we attempt to identify
the major problem areas in domestic shipbuilding and discuss the various issues. In case of
easily tractable problems we have tried to address them in reference to standard global best
practices. If the problem is unique, we have discussed them in light of the particular context.
Towards the end of the paper, in the recommendation section, we have conveyed our views on
how to improve the current situation by adopting some strategies as well as some tactical and
operational decisions.

1. Introduction Koenig, 2001), the Koreans post 1990 &

Research indicates that there is a positive
and highly significant relationship between
economic growth and manufacturing output
growth (Tyler, 1980). History shows us that
the evolution of nations as manufacturing
powerhouses during various periods of time
has a strong association with its
shipbuilding output. The English during 19th
century and early part of 20th century
(Patrick et al, 1976), the Americans post
world-war II (Zendong Lu, 2005), the
Japanese during 1960-90 (Chida, 1990;
recently the Chinese have emerged as
major shipbuilding nations accounting for
over 40% (sometimes more than 70%) of
annual world ship production in terms of
tonnage. It is interesting to note that the
period of rise of these countries as
economic powerhouses and as major
shipbuilding nations overlaps. The
shipbuilding industry, in addition to securing
vital national security and economic
interests, is critical in the development of
other sectors such as steel, manufacturing,
and other ancillary equipment & product
industries (OECD, 2009). India being one

Page | 1
among the fast growing BRIC nations is & expertise in ship construction, availability
poised to be a major economic power by of cheap labor etc. The problems in our
2045 (Third World Quarterly, 2007). domestic shipbuilding will be touched upon
However, India‟s current shipbuilding output in the subsequent sections of this paper.
volume indicated in Table 1 is abysmal to The consequence of these problems and
match our current economic growth. deficiencies was explicit when India‟s
largest state owned shipping company
placed its largest shipbuilding order of
Rank Economy Jul '08 - Jun '09 about $ 400 million for 6 aframax vessels in
CGT ('000) % 2007 with a leading East Asian shipyard.
1 China 5,435.70 34.55% Time & cost overruns, unfavorable fiscal
2 Korea 4,958.70 31.52% policies and locked up capacity of domestic
3 Japan 2,707.70 17.21% yards were reasons attributed to this
4 Philippines 359.50 2.29% overseas order. The situation calls for
5 Brazil 258.60 1.64% serious thinking regarding many aspects
6 India 251.80 1.60% such as government policies, planning,
7 Vietnam 250.30 1.59% capacity addition, design, production
8 France 208.10 1.32% technology, scheduling, supply chain
9 Croatia 198.00 1.26% management, improving productivity of
10 R-o-W 1,103.80 7.02% domestic shipyards etc.
Total 15,732.20 100.00%

Table 1 - World New Shipbuilding Orders The primary motivation of this paper is to
study & analyze Indian shipbuilding
Source: Lloyd’s Register – Fairplay World
industry, especially the management &
Shipbuilding Statistics '09
operations practices, benchmark them with
respect to global best practices, identify
To put this in perspective, China‟s
major problem areas and explore methods
Compensated Gross Tonnage to Gross
to improve the current situation. This article
Domestic Product Ratio, i.e. CGT/GDP (units
is based on field study of operations
in 1000 Ton / Trillion US$) is 1089 whereas
practices in various shipyards in India and
that of India is 199. [The GDP figures
East Asia. Relevant inputs have been taken
considered in the above calculation is based
from shipyard top management, managers,
on 2009 data (IMF – World Economic
engineers, naval architects, supervisors and
Outlook Database, 2011)]. India‟s CGT/GDP
workers, ship owners, regulatory
ratio is about 1/5 that of China whereas
authorities, class surveyors, vendors,
India‟s Export/GDP ratio is about ½ that of
subcontractors etc. In order to preserve the
China. This represents a significant gap in
confidentiality of information, the names of
domestic shipbuilding in order to meet the
these shipyards have been changed. In this
international trade demands. There is a
paper we will be referring to two leading
market out there which is untapped by
East Asian shipyards as “Shipyard U” and
Indian shipbuilders despite the unique
“Shipyard G”. Similarly, we will be referring
advantages India has in shipbuilding &
to three Indian Shipyards as “Shipyard H”,
repair sector such long coastline, experience

Page | 2
“Shipyard D”, and “Shipyard K”, each in a
different stage of organizational maturity.
“Shipyard H” is in its initial stage of
development; “Shipyard D” is in its growth
stage whereas “Shipyard K” may be
considered as in the mature stage with
good order book, stable performance and
evolved organizational standards and
practices.
2. Current State of Indian
Shipbuilding Industry
The Indian shipbuilding is mainly centered
around 27 shipyards comprising 8 public
sector and 19 private sector shipyards
(Planning Commission, 2008). The
shipyards have 20 dry-docks and 40
slipways between them with an estimated
total capacity of 281,200 DWT.
Existing Capacity & Expansion Plans
Cochin Shipyard Limited (CSL) has a
shipbuilding capacity of 110,000 DWT and
Hindustan Shipyard Limited (HSL),
Visakhapatnam has a shipbuilding capacity
of 80,000 DWT. These major public sector
shipyards have the capacity and capability
to manufacture large conventional vessels
such as tankers and bulk carriers in
handymax – aframax range. Other domestic
yards are engaged in construction of
smaller vessels. Indian order book during
2002-2007 was 1.3 million DWT which is
projected to be 5 million DWT during 2007-
2012. As per Indian National Ship-owners
Association (INSA), the total tonnage
required to be added in 11th Five Year Plan
(2007-2012) will be around 5.33 million GT
involving an investment of Rs. 55,000 crore.
Growth & Competition
The growth of shipbuilding in India has
gone up from 4.5 % in the 9th Five Year
Plan period up to 15 % in the 10th Five Year
Plan period (Planning Commission, 2008).
India‟s share in world shipbuilding market
has multiplied more than 10 times from 0.1
% in 2002 to about 1.6 % now. India was
able to increase its share in global
shipbuilding as it could manufacture good
quality vessels at a lower cost due to
availability of cheap skilled labor supported
by 30% subsidy provided by the
government. However, it must be noted
that the increase in shipbuilding may be
largely attributed to construction of medium
and small vessels such as Offshore Supply
Vessels (OSV) and Anchor Handling Tugs
(AHT) for export orders. Cochin Shipyard
(Small Ship Division – Tebma), ABG, Bharti
and Chowgule have done remarkably well in
the export segment. The competition is stiff
in the small ship segment as there are
many players who have the capacity and
expertise to build small vessels. On the
other hand, in the large ship segment, the
public sector shipyards CSL & HSL virtually
hold the monopoly as only they have the
capacity and proven expertise to build large
vessels. Private players such as Pipavav and
L&T have made investments for
construction of facilities to build large
vessels of the order of Very Large Crude
Carriers (VLCC). Nevertheless, these
shipyards are in their initial stage of growth
with evolving systems and procedures that
are promising but yet to be proven.
Therefore, as it stands now, the public
sector shipyards enjoy a monopoly in the
large ship segment without much
competition from other domestic yards. The
competitive intensity and therefore the
attractiveness of the industry may be
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studied using Porter‟s Five Forces Supplier Bargaining Power, Buyer
framework. The five forces are – Threat of Bargaining Power and Industry Rivalry
New Entrants, Threat of Substitutes, (refer figure 1).

•90 % Volume and 78% • Many Small Shipyards

Value of Trade by ship •Competitors in long
•Competition from run for large shipyard
Road / Rail Network •Cheap Labour, Long
•Foreign Players Coastline, 30% RoI
Threat of
Threat of
New
Substitutes
Entrants

Industry
Rivalry

Supplier Buyer
Power Power
•Small Ships - Many
local suppliers •Repeat Orders
•Large ships - Foreign •Price Bargaining
suppliers (import) •PSU - customer
•Priority to big clients

Figure 1 - Porter's Five Forces on Indian Shipbuilding Industry

Fiscal Policy, Taxes & Subsidies
The government of India provides 30%
subsidy on shipbuilding to both public and
private shipyards. The subsidy rate is
expected to be revised to 20% in the 12th
Five Year Plan and subsequently to 10% in
the 13th Five Year Plan. Indian shipyards
have to pay service tax, customs and excise
duties, VAT on all indigenous items as well
as on complete ships. The subsidy partially
negates the effect of the taxes and duties
and aids the yard in pricing competitively in
the international market. It is a well
acknowledged fact that Indian shipyards
were able to cash in during the shipbuilding
boom of 2006-2009 due to the 30% subsidy
that they currently enjoy. With the lowering
of subsidies in 2012 when other East Asian
yards (especially Chinese yards) continue to
benefit from better government subsidies
and reduced taxes, in addition to
government funding in infrastructure, it
would become difficult for Indian shipyards
to competitively price their vessels in the
international market. Indian shipyards have
to pay additional 4 % VAT and CST on
domestic orders. This makes domestic
orders especially from state owned shipping
companies less attractive given the
opportunity cost. It makes better sense for
Indian shipyards to build vessels for foreign
owners by importing materials.

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Consequently, as it can be seen from pie-
chart in figure 2, Indian shipbuilding
19%
industry has turned export oriented with Export
81% of the shipbuilding for export orders. 81% Domestic
The details of the tax burden for Indian
shipbuilders in constructing vessels for
domestic orders and disadvantages vis-à-vis
foreign shipyards are given in table 2.
Figure 2 - Domestic & Export Orders

Table 2 - Comparison of Domestic & Foreign Taxes/Duties

(Source: Ministry of Shipping, Road Transport & Highways – March, 2007)

3. Analysis of Shipyard Operations problem areas. We will also discuss about

best practices that are implementable in
In this section, we will analyze operations domestic context. If the problem is unique,
practices in Indian yards and identify major we will adopt a case specific approach.

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Product Strategy
A ship as a product lies predominantly in
the Design to Order – Make to Order –
Assemble to Order (DTO-MTO-ATO) range.
The many small shipyards in India that do
not have design expertise but get single or
twin orders of the same ship type fall in the
Make-to-Order manufacturers category.
They buy standard designs based on
specific customer requirements and only
manufacture the vessel in small quantities.
As the types of vessels are more and the
number of vessels of similar type is less, the
level of standardization possible is small.
The larger shipyards in India such as
“Shipyard K” fall in the Design-to-Order to
Assemble-to-Order category. Although basic
design is not done in-house, the yard does
detail engineering and production
documentation based on the purchased
basic design to suit the client requirements.
However, the capacity of the yard to build
larger vessels of the size of aframax or
more is limited. Therefore, only 1 or 2 large
vessels can be built at a time. Nevertheless,
this yard gets multiple orders (half a dozen
to a dozen) for smaller high value vessels
such as offshore supply vessels and anchor
handling tugs that contribute better margins
(in percentage) than conventional vessels.
Standardization is limited in large ship
segment but more in small ship segment.
The yard also offer repair services in
addition to new ship building.
Globally leading shipyards such as “Shipyard
U” and “Shipyard G” build very large vessels
in large quantities. They specialize in a
particular ship type such as super-tankers
or containers. Significant standardization is
possible in such small-variety-large-volume
segment leading to higher profitability.
These shipyards have a strong design
competence. However, instead of making
designs for each ship, they use standard
initial designs which can be differentially
modified to suit specific customer
requirements toward later stages of design
work.
Project Initiation & Planning
Timely project initiation and planning are
vital activities for successfully delivering
vessels in time. During the signing of
contract, the cardinal dates – steel cutting,
keel laying, mega-erection, launching,
delivery & commissioning are fixed.
“Shipyard U” does forward and backward
planning to ensure that all timelines can be
met; keeping sufficient buffer for
uncertainties. The design and planning
personnel work together so that technical
activities such as steel fabrication block
erection, outfitting etc. for a particular
project align with availability of resources,
subcontractors, capacity etc. which may be
engaged or allotted to multiple projects. In
“Shipyard G”, all design activity is
completed, all required approval from
classification societies and regulatory
authorities is obtained before production
work begins.
In Indian context also, planning is done
according to cardinal dates. However, time
overruns are not uncommon. Late start of
design work, lack of coordination between
planning, design and production
departments are some of the important
causes for such delays and problems in
implementation of the project plan. “The
hull related planning, design and production
activities is pretty much in our control, but
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not so much the outfitting works,” says the
general manager of a leading Indian
shipyard. The design work does not get
frozen even after the production
commences. This may lead to production
rework later on due to change in design.
Whether the number of qualified naval
architects, planners and design engineers in
Indian shipyards are sufficient? ; Their
productivity etc. are some of the areas
worth looking at.
Ship Design
A strong design competence is essential for
quickly resolving issues that arise in
production. As of now there are less than a
dozen firms in India that have basic design
expertise. Some of these are standalone
design units that do not have manufacturing
facilities but team up with shipyards to form
consortiums that leverage each other‟s
competencies. Only yards such as “Shipyard
H” have both design and manufacturing
expertise. In order to build a strong overall
competence, Indian shipyards may invest in
building good design teams so that they
need to rely less on external parties and
avoid time delays when resolution of
technical issues can be done internally. It
may be noted that leading East Asian
shipyards in Japan and Korea who had
invested heavily in skilled manpower such
as naval architects & engineers during
1960s and 70s are reaping the benefits
now.
As in the case of any new product
development, for ships as well, ship design
units must take into account aspects such
as Design-for-Manufacture (ease of
manufacturing), modular & standardized
design, and the impact of design on
scheduling, production, vendors in the
supply chain and cost of the overall project.
Production Scheduling
In world‟s leading shipyards such as
“Shipyard U” & “Shipyard G”, scheduling of
the projects is done in house with the help
of computer programs. The program does
the scheduling in order to minimize the total
make-span, balance the load between
various work-centers, maximize utilization of
spatial and non-spatial resources and
minimize the waiting time for work-in
progress and final product inventories
subject to following constraints: human
resource capacity (denoted as man-hours),
crane capacity, area capacity of work-
plates, precedence constraints of different
blocks, machinery and shop capacities, load
limit at different work centers etc. This
spatial scheduling is like a bin packing
problem with the base of the bin as the
area available for working and height of bin
as the time available (Raj, 2008). The
objective is to pack the bin as much as
possible (with work) subject to the
constraints mentioned above.
In Indian context, based on the broad level
project plan provided by the planning
department, the production department
does independent scheduling. Although this
is feasible schedule, often it is not the
optimal schedule which minimizes make-
span. Preparation of an optimal schedule
(with the help of mathematical program) in
collaboration with other units such as
design, procurement and production
(constraints) will lead to better results and
help reduce time overruns.
Supply Chain Management
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Materials and Supply Chain Management is
the single most important area, according to
our study, which needs urgent improvement
as it has a high impact on both cost and
time of a project. In most of the Indian
shipyards (for example, “Shipyard D” and
“Shipyard K”), procurement of materials is
done on project basis. Although the
guidelines suggest scientific procurement
policies such as EOQ or better methods,
they are rarely followed. The ordering costs
are high due to frequent separate orders for
different projects. Often the estimate of
materials is incorrect and piles of inventory
(predominantly high-volume-low-value class
“C” items) are stored in the warehouses
even after the project is executed. These
are hidden inventory carrying costs
(incurred perpetually until the materials are
not used for some other project or
removed/sold as scrap) because the facility
may be otherwise used for storing other
materials and equipment or leased/rented
out.
Indian Shipyards have to pay more for
buying indigenous goods than imports. This
is because the government provides 100%
tax waiver on imported shipbuilding
materials. Hence, it makes better financial
sense for Indian yards to import than buy
locally. This is a government policy level
problem. Consequently, even Indian state
owned shipyards import materials, which
means – longer lead time and associated
delays. Just-in-time (JIT) type of system
becomes impractical when the vendor is
located far away from the manufacturing
facility. Besides this, the policy also
hampers the growth of local ancillary
industries such as steel, equipment and
pipe manufacturers which can supply
materials (that account for 60-70 % of
value) to domestic yards.
The ERP systems implemented in domestic
shipyards are namesake only and help little
in improving materials management or
other systems. This is because these ERP
packages were conceptualized for
organizational setups that do not face the
problems of Indian shipyards, and hence
not applicable in their current form despite
customization.
It may be noted that East Asian shipyards
such as “Shipyard U” developed their own
in-house materials management IT systems
that are more realistic solutions to their
organizational context. This shipyard has a
well-developed state-of-the-art SCM system,
integrating the shipyard with steel suppliers,
machinery & equipment manufacturers,
vendors, subcontractors etc. that are
positioned locally (one hour drive from the
shipyard) making good approximations of
JIT systems possible.
Shipyard Layout
Indian Shipyards have a process oriented
layout wherein there are different shops
such as steel cutting shop, fabrication shop,
outfitting shop, blasting & painting shop etc.
wherein the product-part has to be taken
for the operation to be performed. This is a
reflection of the product mix which is high-
variety-low-volume. Process layout involves
more material movement than product
layout which tends to align with assembly
line production. However, this is only
possible when there exists low-variety-high-
volume orders as with “Shipyard U” and
“Shipyard G” that specialize in a particular
vessel type. Nonetheless, with repeat orders
Page | 8
of small-high-value vessels for shipyards
such as “Shipyard K”, which is in the
process of expanding its capacity, it is
advisable to move to a product oriented
layout if it intends to pursue long term
strategy to be leaders, and carve out a
niche in this particular market segment.
Construction Method
Integrated Hull Construction, Outfitting and
Painting (IHOP) used to be the „magic
formula‟ for constructing vessels quickly.
This method is extensively followed by
leading shipyards worldwide. According to
IHOP method, the design of the vessel
would be done system-wise (structure,
HVAC, piping etc.) but construction would
be done block-wise.
Figure 3 - Block Construction
Integrated blocks consisting of hull, piping,
machinery, outfitting etc. would be
separately & simultaneously build and
welded together in the erection dock. Most
Indian shipyards try to follow IHOP method,
but there are major deviations in practice.
By the keel laying date only about 20% of
the blocks are completed. In contrast, in
“Shipyard U”, 80% of the blocks are ready
by keel laying date. By launch date, the
extent of pre-outfitting achieved in Indian
yards is about 10 % while the figure is
about 80 % in East Asian shipyards.
Controlling the time for outfitting is an area
to be seriously looked into if we intend to
eliminate time overruns in Indian yards.
Outsourcing / Subcontracting
As a shipyard approaches its maturity stage
it predominantly becomes an assembly
center with a significant amount of work
outsourced to subcontractors. In our
domestic shipyards, only simple blocks are
outsourced to subcontractors whereas
complex blocks are manufactured in-house.
This means that the burden of critical
manufacturing tasks is on the shipyard. In
contrast, in leading East Asian shipyards
such as “Shipyard U”, all the complex and
difficult blocks are outsourced to
subcontractors. The shipyard invests in the
development and training of subcontractors
to upgrade their skills and expertise. If a
subcontractor defaults on delivery, it is
black-listed. “It is difficult to get good
outfitting subcontractors and very often
fabrication work ends up in rework”, says
manager of “Shipyard H”.
Employee Training & Development
The labor productivity figures of different
shipbuilding nations are shown in Table 3.
Country Mn DWT Employees Productivity
Japan ('04) 23.2 80,000 290
Korea ('04) 23.0 71,800 320
China ('04) 8.8 158,000 56
India ('06) 0.6 12,000 50
Table 3 - Labor Productivity
(Source: Ministry of Shipping, Road Transport &
Highways – March, 2007)
Page | 9
In addition to increasing labor headcount to
match production requirements that cannot
be substituted by automation, Indian
shipyards need to invest in training and
development to make its workforce globally
competitive. The organizational culture and
practices to be developed and type of
training to be imparted to engineers & naval
architects, production workers such as
welders, fitters etc. to improve productivity
in Indian yards is an area worth studying.
4. Unique Advantages of
Shipbuilding in India
Despite the many problems in the domestic
shipbuilding industry, India is blessed with
some unique advantages that ought to be
leveraged upon to improve our position in
the global shipbuilding industry. The Indian
subcontinent is in the form of a peninsula,
with a high coastline to land area ratio.
Most of the industrial cities have close
proximity to ports and shipyards and even
those cities in interior regions are connected
by an extensive network of rail and
roadways. This enables the development of
a robust supply chain network linking the
shipbuilding and ancillary industries. Many
of the ports are natural harbors with high
drafts available for large vessels. Indian
ports and shipyards are also well positioned
to be trans-shipment and repair hubs for
vessels plying on the east-west corridor
across the Indian Ocean. India can also
boast of an abundant supply of skilled labor
available at globally very competitive rates.
India produces thousands of IT savvy
engineering graduates every year who can
be employed in shipbuilding industry to
implement IT-enabled solutions that are
more efficient.
Although, not at the forefront of
technology, Indian shipbuilders over the
years have developed several frugal
engineering practices for construction of
vessels that can be fine-tuned to develop
innovative solutions applicable in particular
contexts. These heuristics (rules of thumb)
that are conventionally used during the
shipbuilding processes can be improved
upon to come up with more efficient
solutions.
5. Recommendations
Based on our study, the following
recommendations are made for decision
making at tactical and strategic levels. The
tactical decisions may be implemented in a
time span of 2-3 years while the strategic
decisions would be governing over a time
span of 5-10 years. In the design of ships,
there needs to be more integration between
the design, planning & scheduling and
production departments. Strategic level
intervention is necessary to develop strong
basic design to production documentation
expertise in the long run. The production
scheduling may be done temporarily by
constraint based optimization which will
give reasonably good solutions; however, in
the long run, shipyards may develop their
in-house software suites to optimize their
scheduling and inventory. The shipyard may
invest in training and development of local
subcontractors in the short run. At a
strategic level, the government and major
shipbuilding players must work to establish
SEZs where ancillary industries may be
developed in clusters and where businesses
can benefit from tax break especially for
export orders. In order to minimize
material flow, the shipyards may start to
evolve to assembly based layouts starting
Page | 10
with virtual cells and focusing on a product
portfolio that will enable implementation of
the product based layouts. In the short run,
the shipyards may work on completing the
outfitting design work within specified time
frame and subsequently, in the long run,
train subcontractors to produce 80% pre-
outfitted blocks before launch. The
shipyards may incrementally automate
processes such as welding etc. in the short
term and adopt newer technologies in the
long term. The shipyards may invest in R&D
units in-house to use OR techniques to
optimize their operations. In the long run,
they may collaborate with academic
institutes for R&D and mentoring. A
snapshot of the recommendations is given
below.

Tactical Strategic
•Integration of design and •Investment in design
planning & scheduling expertise (basic design to
activities production documentation)
•Do scheduling based on •Invest in building optimal or
good heuristics / constraint near optimal scheduling
based optimization softwares in long run
•Material-Take-Off from the •Develop ERP system in-
design software to be linked house based on shipyard's
to the MRP system organizational context
•Invest in training & •Shipbuilding SEZ (esp. for
development of local exports) with ancillary
subcontractors and vendors industry base within SEZ
•Bid for similar ships to •Build product portfolio that
benefit from economies of aids part standardization &
scale in shipbuilding for market positioning
•Continue government •Devise govenrment policies
subsidies for international for growth of Indian
price competitiveness shipbuilding industry.
•Start with virtual cells to •Design new shipyards /
implement group expand capacity based on
technology in shipbuilding. assembly flow pattern.
•Automate processes such •Invest in technologies (such
and marking, cutting & as CNCs) that reduce
welding incrementally. process time in shipbulding.
•Increase design resources / •Invest in training outfitting
schedule appropriately for subcontractors so that 80 %
outfitting design to be of pre-outfitting can be
completed within time. done before launching.
•Start R&D unit in-house for •Collaborate with academic
small process improvements institutes for mentoring.

Figure 4 - Recommendations for Tactical & Strategic Decisions

Page | 11
6. Future Scope of Research
While technical research on ship design and
production is on-going, there is enormous
scope for operations and managerial
research in the shipbuilding context. In
India, institutions such as National Ship
Design & Research Center (NSDRC), IIT
Kharagpur and IIT Madras are engaged in
technical research. In order to improve the
organizational processes, managerial
research is equally important. As of now,
there is a fair amount of extant literature on
shipyard layouts, operations planning and
scheduling etc. However, there is dearth of
literature, especially in the Indian context in
areas such as clustering of design units,
production facilities and ancillary industries,
centralized / decentralized procurement of
materials, inventory control mechanisms for
critical & non-critical resources, effect of
different government policies on shipyard
performance, game theoretical research on
effect of monopolies, oligopolies and
competition on shipbuilding output, effect of
product-mix on standardization of part
components, time-and-motion studies in
ship production processes, organizational
inertia in adoption of new technologies etc.
which are all avenues for future research.
7. Summary
In this article a broad study of Indian
shipyards has been presented. The various
issues both at policy and operational levels
have been identified and discussed.
Domestic operational practices and global
industry best practices have been studied in
detail. Table 3 shows the summary of
comparison of leading East Asian Shipyards
and Indian Shipyards on various
parameters. The article also highlights the
linkages between the government policy
level and strategic level decisions to the
operational level improvements. Further,
the unique advantages of shipbuilding in
India that can be leveraged are described.
In the recommendations section, the
tactical level decisions for short term and
strategic level decisions for long term, to be
taken for sustainable growth of Indian
shipbuilding industry are mentioned. Finally,
the paper concludes with an overview of
current R&D on shipbuilding in the country
and future scope of research.

Parameter Leading East Asian Yards Indian Shipyards

Product Variety Volume Mix
Production Volume
Layout
Capacity of Facilities
Ship Design
Design & Planning Synergy
Scheduling
Automation Level
Pre-Outfitting
Skilled Workforce
Inventory Policy
Vendor Location
Vendor Integration
Outsourcing
Table 4 - Summary of Comparison of Leading East Asian & Indian Shipyards on various Parameters
Few varieties with large volume and Low Volume, Moderate-to-High
many varieties with small volume Variety
Very Large Small
Product Oriented Process Oriented
Expanding to meet demand Insufficient to meet demand
Early Start, Done in-house Late Start, Outsourced
Extensive Limited (Very Less)
Exact Algorithm / heuristics Manual – rule of thumb
High Minimal
80% 10%
Sufficient Inadequate
Just in Time Project Basis (large Inventory)
Very Near (1 hour drive) Very Far – Across Continents
Very High Low
Complex blocks outsourced Simple blocks outsourced

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The authors would like to express their
gratitude to Mr. Y. C. Lee, Mr. Roy
Kuriakose, Mr. Bala, Mr. J V S Rao, Mr. N.
Bhaskar, Mr. Nikhil Raj, Mr. R Singh, Mr. V.
Dingley, Mr. Ram Prasath, Mr. Jose Mathew,
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study.
The authors may be contacted at the
following e-mail IDs:
Joshin John: joshin.john@iiml.ac.in
Vijaya Dixit: vijaya@iiml.ac.in
Prof. Rajiv K. Srivastava: rks@iiml.ac.in
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