‘Maritime cluster will improve productivity of Goan shipyards and hence the profitability’

Giving a boost to the state’s plans for industrial development, a MSME maritime cluster is set to come up in Verna after nearly two years of planning. The project promises to revive the Goan shipbuilding industry from the adversity of the mining industry closure.

Giving a boost to the state’s plans for industrial development, a MSME maritime cluster is set to come up in Verna after nearly two years of planning. The project promises to revive the Goan shipbuilding industry from the adversity of the mining industry closure. It is one of the few projects to be initiated during pandemic times. Here Suraj J Dialani, chairman and managing director, Konkan Maritime Cluster, talks on the cluster progress and its benefits to the economy. Dialani who is also the president of Shipyard Association of Goa, says to Shoma Patnaik that, the cluster is a landmark happening as for the first time diverse stakeholders are coming together for the common cause of business growth

While the maritime time cluster is important to Goa what is the ground level response like from small shipbuilding units?

The family is growing. When we started we were just seven companies. From seven we went to 18 companies and then 36 followed by 49 companies. Today 81 companies are a part of the Konkan Maritime Cluster which is the special purpose vehicle (SPV) company created to implement the project. As the awareness is growing more entrepreneurs are getting interested in this initiative.  Member companies are free to have five shares or one share of the share capital with each share priced at Rs 10,000. The SPV being a non-profit making, sec 8 company whatever profit it makes will be ploughed back into the company. It is a democratic set up as under the MSME cluster scheme no one member can own more than 10 per cent of the share capital. There are large shipbuilding states in India but Goa although a small state is leading the crowd in setting up a maritime cluster. Local industry coming together will be big force

Is the project on schedule?

The project is on schedule. The land was allotted by the GIDC in June 2020, and cluster members have paid the first premium.  We are in process of taking the construction license from the state. The finalization of the plant layout, the factory layout, the fire fighting and safety equipment, the sewage treatment plant and all the equipment, how they will be placed, etc. viz. the technical layout has been done. Two weeks back the first plan was submitted to the GIDC technical committee for approval. The committee has made recommendations which are being incorporated keeping in mind the building code, marine practices, etc.  Once GIDC approves the technical plan we will apply for the construction license to start the work by end- October. The project is taken time but the jobs are being done diligently. The cluster will come up in phases with mid-February 2021 as the completion date of phase 1, when the first product (equipment) will be available and Shed 1 thrown open for services to industry.  The maritime cluster is not going to be a glamorous structure. It will be full of factory like sheds.

Have the members decided on the first product of the cluster?

It will be a CNC short blasting machine. The machine is there in Goa Shipyard and also with Chowgule Shipyard but small shipyards in the state do not have access to it.  The cluster is purely for MSME units. It needs to be said that, phase 1 will also have a design lab providing sophisticated software in shipbuilding.  The software will enable small shipping companies to design the boat, sail it in simulated pre-conditions, do the design analysis, in short the computational fluid dynamics prior to building.

What is the cost of the cluster and funding?

When we did the detailed project report the cost was estimated at Rs 16-odd crore, of which Rs 15 crore is maximum that can be given under the MSME Cluster Development Programme Scheme. Therefore about Rs 12 crore (80 per cent ) will be funded by the MSME ministry, 10 per cent of Rs 15 crore from state government  and the balance funding will have to come from the members.  The implementing agency is the KVIC. They will form a purchase committee and the committee will tender the machine. SPV members have to raise the money to buy common machinery in the cluster.

How will the cluster benefit local shipbuilding units?

It will help capacity building of local shipyards. They will improve their productivity and hence the profitability. A fabricator who is doing cutting, welding, painting can now focus on the core competencies at half the cost. Shipbuilding is risky activity and the design lab in the cluster will cut down the risk of companies. The cluster will lead to employment generation and creation of an ancillary industry.  The cluster itself will need 30-40 people but with business of local ship building units increasing the multiplier effect on employment is estimated at 7,000 jobs.  People from global companies will want to build boats in Goa. 

What is the role of the state government in the cluster?

The Goa government has been extremely supportive to ensure that work is done diligently and also in the shortest possible time.  The biggest contribution of the state is allocating the land when plot applications are pending with the Goa- IDC for three- four years.  The state is also contributing by giving us 10 per cent of the cost of the project. 

Since this will be the first maritime cluster in India are you seeking technology advice from international maritime clusters? 

We do not need any technology from foreign companies because we already have four member companies in the SPV who are already exporting ships to UAE, Mauritius, Maldives and Europe.  The state has globally qualified top class shipping vessel designers who are working for shipbuilding companies of Norway but only lacked in infrastructure to make a mark. Goan MSME shipbuilding units are technically competent but only lack in infrastructure because of which they were feeling it difficult to compete with low-cost countries like Vietnam, China and Indonesia. Having access to quality machinery will help local units to scale up.  However we do have plans of collaborating with maritime clusters of the world to keep track of latest developments and to make a policy difference to maritime activities in the country. 

The project is two years in the making how did it actually come about?

Goa being a mining state was always into shipbuilding owing to its long coastline.  Shipbuilding activity in the state is going on for not less than 70 years with the result that, there are almost 35 shipyard units along the coast. So Goa always had a shipbuilding cluster although it was not given a formal name.  We really didn’t have to do anything. The Director General of Shipping, Mumbai, had the vision to identify among the whole country that this is one state which has an existing cluster with existing competencies and skill sets just lying unutilized.  The DG Shipping said this is the best place to implement the cluster scheme and that’s how the project took off. The DG Shipping office felt that, local shipbuilding units had only looked at mining as their bread butter while, the industry in fact was well developed as it had local naval architects, manufacturers of marine equipment, small shipyards, etc. They realized that, Goan shipbuilding units being small players need to be empowered  as otherwise they cannot compete at national level . Each machinery needed by shipbuilding units costs Rs one crore to Rs two crore. Even if small units hypothecate assets and take a loan they will not have the kind of orders to repay the loan. The existing central scheme of the MSME Ministry aimed at empowering small units and that’s how the whole initiative started in June 2018 by Dr Malini Shankar, the former DG Shipping. Since this is a quasi-government project with central funding obviously the government will do its due diligence.

MSME Clusters across India

The central Ministry of Micro, Small and Medium Enterprises (MSMEs) is keen on the cluster model for improving productivity, competitiveness, collectiveness, and capacity building of the MSME sector.  As per the ministry any group of companies or enterprises in a particular geographical location involved in similar activity constitute a cluster. The micro and small enterprises cluster development programme provides financial assistance for setting up a common facility center that can be used by members of the cluster. Units that want to operate through a cluster have to form a special purpose vehicle (SPV) to take benefit of the scheme in which the central government contributes 80 per cent, the state government 10 per cent and the SPV 10 per cent. Industrial clusters allow small enterprises to access modern technology without having to burden the cost of finance and focus on development of the product.

MSE clusters have not been set up so far in Goa but other states such as Maharashtra, Karnataka, Gujarat, etc., have them. Coming to the Konkan Maritime Cluster, it is the first maritime cluster in India. The land for it at Verna was provided to the SPV members at about Rs three crore. Members have to pay in seven equal installments for the land, of which the first installment was recently paid.  Cluster members get to use the machinery at the common facility center at a subsidized price.