India’s Mazagon Dock To Buy Controlling Stake In Sri Lanka’s Largest Dockyard

India’s Mazagon Dock Shipbuilders Limited (MDL) is going to acquire a major stake in Sri Lanka’s biggest and most important shipyard, the Colombo Dockyard PLC (CDPLC).

This is MDL’s first acquisition of an international shipbuilding facility and is being celebrated as a historic moment for the Indian defence sector and its foreign policy.

Per reports, the MDL board cleared the investment of USD 52.96 million or Rupees 452 crore. After the deal is completed, MDL will have a 51% ownership stake in the Sri Lankan yard, making CDPLC a subsidiary.

The deal will be closed in 6 months, after which the Colombo shipyard will be a part of Mazagon Dock Shipbuilders. In a social media post, MDL stated that this acquisition will enable it to get a strong foothold in the Indian Ocean Region and become a key regional player.

This move is a geopolitical step taken by India to enter one of the most strategic locations, which is witnessing the growing influence of China.

Controlling this port will give India a reach outside its territorial boundaries and give it logistical and operational presence in Sri Lanka, which is strategically located amidst east-west shipping routes.

This is also to balance China’s presence in Sri Lanka’s maritime sector, as the latter has spent billions in the last decade, with investments in ports and maritime infrastructure projects like the Belt and Road Initiative.

A case in point is the Hambantota Port leased to China Merchants Port Holdings for 99 years after Sri Lanka could not pay back its loans.

Beijing is also undertaking the Colombo Port City Project and other developments that have alarmed New Delhi about Beijing’s strategy to surround India with its naval bases and ports.

Mazagon Dock is India’s major defence shipyard, which is known for constructing warships, submarines and destroyers for the Indian Navy. With this takeover, the shipyard will boost its market outreach and enhance its research and development capacities.

Colombo Dockyard has dealt with foreign navies and private clients, and its shipbuilding expertise will surely boost India’s export drive under the “Amrit Kaal Vision 2047”.

This acquisition will also aid India in protecting its maritime interests in the Indo-Pacific and countering China in the region. With rising tensions and growing Chinese influence, it has become essential for India to develop bases and assets for its maritime security.

References: Mint, Reuters

Source: Maritime Shipping News