Friday, 14 May 2010

Industry Snapshots

Russians selling cruise missile systems in freight containers, according to media reports. The Club K Missile system is housed in a forty foot freight container says Concern orinformsystem-Agat, the marketing company selling the deadly weapon. The container looks like a normal FEU from the outside, but it houses four deadly missiles that can be launched from anywhere- ship, lorry, truck and train included.

The manufacturer of the missile system, Novator, has apparently shown a dramatic movie at the Defence Services Asia exhibition in Malaysia, where Club-K containers on ships, trucks and trains are used to attack enemy installations with cruise missiles. Iran and Venezuela have reportedly shown interest in the system, a move that has the Americans worried.

Observers are also concerned that the missile system will push the envelope in weapons infiltration and proliferation. Security concerns are quite a separate and equally compelling matter, since detection is extremely difficult. Reuben Johnson, a defence consultant, says, ‘You cannot readily identify what's being used as a launcher because it's very carefully disguised. Someone could sail off your shore looking innocuous then the next minute big explosions are going off at your military installations.'

The Club K will enable commercial ships to attack naval vessels or hit land targets. IHS Jane's Defence Weekly analyst Robert Hewson described the product as an “unwelcome” development to Fairplay. “Containerising a missile in such an overt/covert way, I don’t think anyone has done this before,” he said. “Why does someone want a strategic weapon that can be hidden in a container?”

Indian Government supports Indian shipping by giving first preference to Indian bottoms. “It is proposed in the draft action plan, that to promote Indian shipbuilding sector, we may give the first right of refusal to Indian-built, Indian-flagged vessels and second right of refusal may be given to the other Indian-flagged vessels,” R.K. Sen, assistant director in the shipbuilding and repair division of the ministry of shipping, wrote in a recent circular inviting comments from DGS, as reported by LiveMint.

This means that public sector companies like ONGC, BPCL et al may be the first to support Indian built or flagged vessels. Mint reports that this may be a short in the arm for private shipyards like ABG, Bharati, Larsen and Toubro and Pipavav, as presumably more ships will be built in India.

However, the newspaper quotes a shipping company executive apparently opposing the move, saying that “Indian shipyards are still not up to the standards of international shipyards and could not cater to the requirements of Indian demand. It will take at least 10-15 years for Indian ship makers to reach global standards”.

Other industry watchers say that the government’s move is overdue, and that India needs to support the sector in the same way as the Chinese do, with easy credit and logistical support for the maritime and shipbuilding industry. Others say that the Indian government, which had announced plans of divestment in the Cochin shipyard, may be looking at boosting the sector for better valuations before divestment.

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