Make In India: Korea agrees for tech transfer; LNG ships to be built locally

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New Delhi | Published: July 20, 2015 12:28:10 AM

In what could give a boost to the Make in India campaign, the government could soon nominate three local firms — Cochin Shipyard, L&T Shipbuilding and Pipavav Defence & Offshore Engineering...

In December last year, during Swaraj’s maiden trip to Seoul, she discussed with Korean minister of trade, industry and energy Yoon Sang-jick about co-production of LNG ships here, as part of the ‘Make in India’ programme. (Reuters)In December last year, during Swaraj’s maiden trip to Seoul, she discussed with Korean minister of trade, industry and energy Yoon Sang-jick about co-production of LNG ships here, as part of the ‘Make in India’ programme. (Reuters)

In what could give a boost to the Make in India campaign, the government could soon nominate three local firms — Cochin Shipyard, L&T Shipbuilding and Pipavav Defence & Offshore Engineering — to build liquefied natural gas (LNG) transportation vessels for state-run GAIL (India).

The move comes in the light of these three shipyards signing memorandums of understanding (MoUs) with Korean firms for technology-sharing. Earlier, the Korean shipyards had expressed reservations in transferring their state-of-the-art technologies to Indian firms, even as they were keen on the business opportunity offered by India’s planned LNG imports.

Sources said after the ministry of external affairs took up the matter with the Korean government, the latter has agreed to allow Korean shipbuilders to share technologies with Indian firms as joint venture partners. The MoUs pave the way for construction of LNG vessels, which are cost-intensive and sophisticated, in India for the first time.

“These three firms would be nominated to build three vessels each in India,” a source privy to the development told FE.

B C Tripathi, chairman and managing director of GAIL, however, declined to comment.

GAIL (India) has drawn up a plan to invest an estimated $7.57 billion for hiring a fleet of sophisticated LNG ships to ferry gas from the US to India for 20 years, starting 2017. The cost, excluding fuel, canal and port call charges, which, again to be borne by GAIL, is seen to be close to $30 million.

The PSU gas marketing firm had failed to attract any Japanese or Korean shipbuilders to build LNG vessels in India after floating global tenders. The government had insisted that GAIL should ensure that a third of the shipbuilding must be on the Indian soil. However, no Indian shipyard has ever built a vessel to transport LNG and foreign giants based in Korea and Japan turned down India’s request to form joint ventures that facilitate transfer of technology.

The delay in finalising the tender could land GAIL in a crisis of not having LNG vessels on time to import gas from the US. The tender was first launched with a cut off date of October 30, 2014, which was later extended thrice: To December 4, January 6 and, finally, to February 17. External affairs minister Sushma Swaraj and petroleum minister Dharmendra Pradhan made an aggressive diplomatic push with South Korea for the exchange of technology.

In December last year, during Swaraj’s maiden trip to Seoul, she discussed with Korean minister of trade, industry and energy Yoon Sang-jick about co-production of LNG ships here, as part of the ‘Make in India’ programme.

Reports also said Swaraj offered that India would purchase giant LNG tankers from Korea outright, given its growing energy needs.

Four Korean shipyards qualified to participate in GAIL’s tender namely Samsung Heavy Industries, Daewoo Ship Building and Marine Engineering; Hyundai Heavy Industries and STX Offshore & Shipbuilding.

Tech tonic:

* Cochin Shipyard, L&T, Pipavav Defence to make LNG carriers locally
* Korean firms, as JV partners, to supply tech
* GAIL to use locally-built carriers to import US gas
* Samsung, Daewoo, Hyundai, STX Offshore qualify in GAIL’s tender
* Local production result of India-Korea diplomacy

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