New Delhi: A proposal for Reliance Defence and Russsia's United Shipbuilding Company (USC) to build four Talwar class frigates for the Indian Navy is on the agenda for summit meeting in Moscow on Thursday between Indian Prime Minister Narendra Modi and Russian President Vladimir Putin, sources said.
The frontline warships will be built for around Rs 30,000 crore (around USD 5 billion) at the shipyard at Pipavav in Gujarat that Reliance Defence recently acquired. Under this agreement, a major warship will be built for the first time at an Indian private sector shipyard.
The agreement between Reliance Defence and USC also includes a partnership for refit and modernisation of all Indian Navy surface ships of Russian and Soviet origin at Pipavav shipyard, the sources said.
Currently, there are 35 Russian/Soviet-origin surface ships in the Indian Navy fleet. The value of this business is estimated to be over Rs 35,000 crore. The combined value of two opportunities exceeds Rs 66,000 crore over the next ten years.
The strategic cooperation agreement, which is the first one of its type between a Russian Defence OEM and an Indian private sector company, the sources said.
"This will demonstrate the capability of Pipavav Shipyard as a leading global warship builder. This is set to be a transformational catalyst in the emergence of private Indian shipyards as lead suppliers to the Indian military. It is also intended to usher in new standards for quicker delivery of warships made in India while ensuring the highest quality and workmanship," the sources said.
"The Reliance-USC agreement also heralds the arrival of Pipavav as a leading shipyard in the MRO, refit and mid-life upgrade segment of the military shipbuilding industry," the sources added.
Reliance Infrastructure had recently acquired an additional 17 percent stake in Pipavav Defence for an estimated Rs.850 crore through an open offer, taking its total holding to nearly 35 percent. Reliance Infrastructure had purchased an additional 17 percent stake in Pipavav Defence through an open offer. The open offer was made by Reliance Infrastructure and its wholly-owned subsidiary, Reliance Defence Systems Pvt Ltd.
Reliance Infra had said in a statement: "Upon completion of applicable formalities, Reliance Infrastructure will acquire sole management control of Pipavav Defence and the board ofPipavav will be reconstituted, together with the company being renamed Reliance Defence and Engineering Ltd."
In March 2015, the company had acquired about 18 percent stake from Pipavav Defence's promoters for Rs 819 crore at Rs 63 a share.
The Competition Commission of India (CCI) and the Gujarat Maritime Board (GMB) have already approved the acquisition together with management control of Pipavav Defence. Last month, Pipavav Defence had also announced it plans to exit the corporate debt restructuring (CDR) package, post Reliance Infrastructure's open offer.