Trump clears foreign shipyards to build US warships - what it means for India

The United States has recently permitted foreign shipyards to build its warships, which could be a welcome development for Indian shipyards. Since 1968, the construction of US Navy ships anywhere other than on American soil has been strictly prohibited by a law known as 10 US Code 8679. However, President Donald Trump has decided to waive this rule for national security reasons, opening up new possibilities for shipbuilding.

This decision is particularly significant for India, as it could provide a pathway for its shipyards to potentially participate in the construction of US warships. The new National Security Presidential Memorandum signed by Trump promotes the "Finland model," which involves foreign yards constructing the initial vessels abroad, with later vessels being built in US shipyards.

Under the new guidelines, foreign shipbuilders can build up to two ships in each of three different classes at their home shipyards before transferring them to the US. To qualify, these shipyards must also establish a new shipyard in the US or take majority ownership of an existing one. The shipbuilder must also hire and train an American workforce, license its proprietary shipbuilding technology and techniques to the US shipyard, and source an American supply chain for construction and maintenance.

Interestingly, while Larsen & Toubro, Mazagon Dock Shipbuilders, and Cochin Shipyard in India already hold Master Ship Repair Agreements (MSRAs) with the US, these agreements are specific to the repair and maintenance of non-commissioned, civilian-crewed support ships. They do not cover the construction of commissioned, Navy-crewed combatant warships, which are a separate matter altogether.

However, with the waiver mechanism now formalized, Indian shipyards holding MSRA status could potentially be considered for construction work under the new framework. The Secretary of War has been given authority to make the final national security determination on any such waiver. While the memo does not change the distinction between civilian support ships and combatant warships, it opens up new opportunities for India's shipyards in the realm of US warship construction.