Financial Times

CDL seeks fair competition against Indian yards

Colombo Dockyard Ltd. is trying to get itself exempted from an Indian government price protection scheme that gives an advantage to Indian yards handling vessels of Indian ship owners who account for a large chunk of CDL's repair business.

The company, which will have to rely largely on repair work this year after navy orders for new buildings dried up with the ceasefire, sees the price protection as a non-tariff barrier that allows Indian yards to be 10 percent more expensive than foreign yards.

It is lobbying the government to take up the matter with Indian authorities as part of the liberalization of trade and services under the Indo-Lanka free trade deal.

"If trade is free why should there be a difference when it comes to ship repair?" asked Mangala Yapa, CDL director and general manager. "At least for Sri Lankan yards, there shouldn't be such a difference."

CDL's strategic location, almost equidistant from the main yards on India's east and west coasts, makes it ideally positioned to win Indian repair work, he said. CDL also hopes to purchase more of its requirements, such as spares and in the long run even steel, from India. Colombo Dockyard is looking to diversify its repair work, now dominated by tankers, mainly Indian-owned, and has won a contract for major lay-up repairs to Sagar Vijay, a drill ship owned by India's Oil and Natural Gas Corporation. Competition from Chinese and Middle Eastern yards, which forced the company to give discounts that squeezed margins in previous years was, is still there. "But Chinese yards have realised their inability to maintain low prices while providing quality, safety and timely delivery," Yapa said.