Audit Reports
Defence
Report No. 32 of 2010 - Performance Audit of Indigenous Construction of Indian Naval Warships
Overview
India is a major maritime nation with vital economic and security interests linked to the seas. Although the Indian Navy's major role revolves around deterrence of security threats yet by virtue of India's emergence as an economic power and its geography, the Indian Navy's role has expanded considerably during peace-time as well. To do justice to this role, it is imperative that the Navy be equipped with the requisite number of ships. The Indian Navy has in place a detailed ship-building plan which has been prepared after considering specific requirements for ships, funds availability, and decommissioning schedule of various ships. Indian Navy has based its vision of ship acquisition on construction of its ships at Indian shipyards.
Warship construction is a complex task and effective management of all related activities is vital for ensuring that the ships have the potential to achieve the capabilities envisaged. An earlier audit report1 in 1998 on the construction of frigates indicated significant time and cost over-runs and deficiencies in internal controls. A decade later, audit has re-visited this topic as the Indian Navy has invested on an average almost 55 per cent of its capital budget during the period 2005 - 2009 on the Naval Fleet. Audit sought to assess whether there have been improvements in the construction process and whether key issues highlighted in the 1998 report have been appropriately addressed.
Out of four projects sanctioned between 1986 and 2003, this performance audit reviewed three projects which are at varying stages of construction. These are the P15A (Destroyer), P17(Frigate) and P28 (ASW Corvettes) projects respectively. The period covered under the audit was 2005-06 to 2009-10. The performance audit was initiated by discussing the audit scope, objectives of audit and criteria with management level at the Ministry of Defence and Naval Headquarters. Subsequent audit examination consisted of scrutiny of documents/ records at the Ministry of Defence, Naval Headquarters and the Public Sector Shipyards (Mazagon Dock Limited, Mumbai and Garden Reach Shipbuilders and Engineers, Kolkata).