India's Mazagon Dock Shipbuilders Limited is set to invest $53 million in Sri Lanka's leading company, CDPLC. This deal is considered a significant setback strategically for China's Indian Ocean strategy.
MDL and CDPLC Deal: A significant deal is about to take place between India and Sri Lanka, which is not only important from an economic perspective but also strategically. India's state-owned defense shipbuilding company, Mazagon Dock Shipbuilders Limited (MDL), has decided to acquire a controlling stake in Sri Lanka's Colombo Dockyard PLC (CDPLC). This deal is worth approximately $53 million, or about 439 crore rupees.
MDL will purchase CDPLC shares in two phases
Under this deal, MDL will purchase CDPLC shares in two parts. In the first phase, MDL will acquire shares from Onomichi Dockyard Company Limited of Japan, which is currently the largest shareholder of CDPLC. In addition, some new shares will be issued by CDPLC, which MDL will purchase. Thus, this Indian company will acquire a controlling stake in Sri Lanka's largest shipbuilding company.
Features and Strategic Importance of the Deal
Colombo Dockyard PLC is considered one of the most reliable shipbuilding companies in South Asia. This company has built patrol vessels, tankers, and special cable-laying ships for Japan, Norway, France, India, the United Arab Emirates, and several African countries.
Meanwhile, Mazagon Dock has built Scorpene or Kalvari-class submarines in India and is currently working on several defense projects. It also has the opportunity to secure a project to build next-generation stealth diesel-electric submarines for the Indian Navy, with an estimated cost of 70,000 crore rupees.
India's Growing Shipbuilding Strength in South Asia
According to MDL Director Captain Jaganmohan, this deal will prove to be a gateway for the shipbuilding industry in South Asia. It will not only strengthen MDL's global presence but will also give India a major boost in becoming a global shipbuilding power.
Why China Will be Affected
This deal could be a cause for concern for China. China is already trying to increase its strategic influence in Sri Lanka. It tried to strengthen its position in the Indian Ocean by leasing the Hambantota port. But now, a major defense company of India's decisive investment in Sri Lanka could change this balance.
