New Delhi: Indian shipbuilder Pipavav Defence and Offshore Engineering Co Ltd said that it has been selected by state-run defense shipyard maker Mazagon Dock Ltd as partner to form a joint venture (JV) that will build warships and submarines for the Indian Navy.
"The government of India has conveyed, vide its letter dated May 2, 2012, that Pipavav Defence and Offshore Engineering Co Ltd has been chosen as its partner for formation of joint venture to build warships for Indian Navy," Pipavav said in a filing to the stock exchanges Thursday.
Pipavav received approval from the Foreign Investment Promotion Board (FIPB) in April last year for foreign direct investment (FDI), making it eligible to bid for multi-billion dollar defense contracts, along with foreign partners, following the government's approval to allow public private partnerships in the defense sector.
In September, last year, Pipavav signed a 50:50 joint venture agreement with Mazagon Dock to build submarines and warships for the Indian Navy.
However, the defence ministry put on hold the JV, after Pipavav's rivals, including Larsen & Toubro Ltd and ABG Shipyard, cried foul over the selection policy.
These companies alleged that Mazagon Dock did not set any deadline for submitting the proposal as also disclose the evaluation criteria.
Defence minister A K Antony had then said that his ministry will look into the complaints and will put on hold the JV, until the new JV policy was put in place.
However, in February this year, the ministry issued new policy guidelines for establishing JV companies by defense undertakings.
According to the JV, the newly formed entity -- Mazagon Dock Pipavav -- will implement part of the existing orders of Mazagon Dock of Rs 1 trillion and also bid for future defense contracts in India.
Mazagon Dock is the country's largest defense shipyard and accounts for more than 85% of the defense vessels built in the country.