India has put on hold the joint venture between state-run shipbuilder Mazagon Dock Ltd. and Pipavav Defense and Offshore Engineering Co. after receiving complaints from other commercial shipyards that were passed over for the deal.

The Indian defense ministry is now forming a new policy for public-private business partnerships to establish greater transparency, according to Defense Minister A.K. Antony.

The joint venture, announced Sept. 12, was intended to create an independent company named Mazagon Dock Pipavav Ltd. that would work on Mazagon’s one-billion-rupee ($22 billion) backlog and bid for future defense orders (Aerospace DAILY, Sept. 15).

“The issue needs to be fully examined and settled before any forward movement takes place on this front,” Antony told a parliamentary committee Sept. 26.

Mazagon Dock Ltd. (MDL) issued an expression of interest in March 2011 seeking strategic partnership with Indian private sector shipyards to meet the timelines for filling its orderbook. L&T, Bharati, ABG and Pipavav yards were shortlisted. This was followed by presentations from the shipyards and site visits by MDL officials to evaluate the various strengths and capabilities.

The eventual selection of Pipavav irked the other companies, which pointed out that the decision had been made without waiting for their detailed submissions.

Partnering with MDL would help any company tap large government contracts for defense ships and submarines, boosting its revenue and shipbuilding capabilities.

Antony says that any public-private joint ventures must compete for contracts. “We are treading on a new path and we would like to ensure that transparency is maintained at all levels,” he adds.

Pipavav was the first company in the private sector to get orders for frontline warships, which are priced from $100 million to $6 billion each. The company has outstanding orders of $1.5 billion, of which 42% are defense contracts. Pipavav Defense owns India’s largest dry dock and has a license from the government to build warships.