I read this piece of news a few days ago and found it shocking. Here is the article:
India has cleared its largest ever indigenous defence contract worth Rs 45,000 crore to manufacture seven advanced stealth frigates for the Navy at shipyards in Kolkata and Mumbai.
The P17A warship project, which will be India’s most advanced and stealthy frigates, has been cleared by the Defence Acquisition Council (DAC) on Friday.
Sources said that brushing aside a request by the Navy that two of the indigenously designed frigates may be manufactured abroad, the DAC has decided that all seven warships will be manufactured in India by the Mazagon Dock Limited, Mumbai (MDL) and the Garden Reach Shipbuilders and Engineers (GRSE), Kolkata.
The Defence Ministry has allocated a budget of Rs 45,000 crore for the project and the work will be divided between the two shipyards. The P17A frigates will be even more advanced than the P17 Shivalik class warships that are currently being inducted by the Navy.
For those keeping scores at home, it’s around $10 billion for 7 ships or around $1.4 billion per ship. This is an increase over the original announcement in 2006 that put the price tag of each ship at around $900 million. I think India has had some experiences recently with cost escalations in naval projects. They want to make sure to allocate all the necessary funding, so that it does not have cost overrun this time.
To put this into perspective:
A 054A costs around $200-250 million depending on the conversion rate.
I think Singapore paid $1 billion for 6 Formidable class ships back in early 2000s, although that only includes the ToT, weapon systems and the first unit.
The first batch of Talwar cost $1 billion for 3
The second batch of Talwar cost $1.6 billion for 3 (although a lot of that is due to USD depreciation)
The Project 17 Shivalik class apparently costs $650 million each
The most recent order of 4 FREMM class by Italy cost 1.4 billion EUR -> 350 million EUR per or about 500 million USD depending on the conversion we use.
The entire horizon class program cost around $4 billion for 4 ships
KDX-3 is around $900 million
The 6 Type-45 destroyers cost UK 6.46 billion pound, which is anywhere from 8 to 10 billion USD depending on the conversion rate.
It looks like the going rate for a modern stealthy frigate with medium range air defense and good ASW capabilities is around $500 million. The going rate for a larger AAW ship with area defense is around $1 to 1.5 billion.
With the price that India is willing to pay for these 7 ships, it should turn out to be a very capable ship. If you look at the specifications of Shivalik class, its weapon and sensor fit is similar to your average modern frigate like the La Fayette derivatives, Talwar and 054A. $650 million looks to be more than what the other countries paid for comparable frigates, but I think part of the cost goes toward improving Indian shipyard to be able to handle such projects in the future. With more than double the cost, Project 17A looks like it will be a whole different beast. Just looking at the price tag alone, it looks to be an AAW ship with long range SAM and Aegis like combat system. On the other hand, I kept reading Indian sources that said this ship will only be around 5600 ton in displacement. That would make sense because larger Project 17A class would intrude in the territories of Project 15A, which is in the 7000 ton range. Even now, it seems that Project 15A is really not that relevant when the smaller Project 17A might turn out to do the same job much better. So, I think it would be interesting to see what Project 17A turn out to be. If it turns out to be like Horizon class or AAW version of FREMM, it would be well worth the money after we factor in higher than projected inflation, cost of upgrading the shipyards, transfer of technology and such. However, if it turns out to just be a more powerful version of Project 17, I think they are really paying far too much for these ships.