Mazagon Dock acquires Sri Lanka’s biggest shipbuilding facility Colombo Dockyard: Read how this move will help India check the growing influence of China in the Indian Ocean
In a major move towards extending its maritime presence and influence, India’s state-run defence shipyard Mazagon Dock Shipbuilders Limited (MDL) has made a move to acquire a majority stake in Colombo Dockyard PLC (CDPLC), Sri Lanka’s largest and most strategically positioned shipbuilding and repairing complex. This is MDL’s first international acquisition and is being touted as a historic moment for India’s defence industry and foreign policy.
As per the official release, MDL board cleared the investment of as much as USD 52.96 million (around ₹452 crore), which will be made in a combination of primary subscription and secondary purchase of shares from present shareholders. The existing majority shareholder in CDPLC, Japan’s Onomichi Dockyard Co. Ltd., will be among the sellers. Upon completion of the deal, MDL will have at least 51% ownership in the Colombo-based shipyard, essentially making CDPLC a subsidiary.
The deal will close within six months, after which the Sri Lankan shipbuilder will become a part of Mazagon Dock Shipbuilders. In a social media post, Mazagon Dock said that “CDPLC gives MDL a strategic foothold in the Indian Ocean Region—a key maritime corridor. With this, MDL begins its transformation from a domestic shipbuilder to a regional maritime player with global ambitions.”
MDSL added, “Aligned with Maritime Amrit Kaal Vision 2047, this move strengthens India’s regional maritime influence and expands MDL’s global reach.”
This takeover is not merely a commercial choice—it is a carefully considered geopolitical step. Through majority acquisition of Colombo Dockyard, India earns strategic entry into one of the Indian Ocean Region’s most strategic locations, which is increasingly becoming a theatre of influence between regional players, especially India and China.
Strategic importance of Colombo Dockyard
This port is one of the South Asia’s busiest shipping ports, situated within the Port of Colombo. Colombo Dockyard is a critical maritime asset. The shipyard was founded in 1974 and has for many years been Sri Lanka’s premier facility for ship building, repair, and maintenance. It had a consolidated turnover of LKR 25,447 million (approximately ₹700 crore) in FY24 and boasts a robust infrastructure base. The shipyard is significant in facilitating both commercial and defense maritime activities.
India’s acquisition of control over this facility gives it the ability to increase its industrial and strategic reach outside its territorial boundaries. It also gives India logistical and operational presence in Sri Lanka, a nation that sits at a strategic midpoint in great east-west shipping lanes.
Countering China’s growing presence
India’s purchase is in the wake of rising alarm about China’s deepening presence in Sri Lanka’s maritime infrastructure. During the last decade, China has spent billions of dollars investing in Sri Lankan ports and infrastructure projects as part of its Belt and Road Initiative (BRI). The most visible example is the Hambantota Port, which was leased to China Merchants Port Holdings for 99 years after Sri Lanka defaulted on its loans.
In addition to Hambantota, China is also busy with the Colombo Port City project as well as other container terminals at Colombo Port. These initiatives have put New Delhi in alarm, which sees them as part of Beijing’s “String of Pearls” strategy—an effort to encircle India with a cluster of Chinese naval bases and trade ports.
Colombo Dockyard is located within the greater Port City of Colombo, one of the largest ports in the world, which has added new terminals in a mega expansion project. The first terminal was awarded to a consortium of China Merchants Holdings (International) and Aitken Spence.
Notably, the Colombo West International Container Terminal is operated by Adani Ports and Special Economic Zone Ltd along with two local partners, John Keells Holdings and Sri Lanka Port Authority. The Indian port giant signed a 35-year build-operate-transfer agreement in 2021, and the terminal started operations in April this year.
With the purchase of Colombo Dockyard, India is making a statement: it is prepared to invest strategically within the region to balance China’s footprint and restore its leadership in the IOR. The action also fits with India’s decades-old policy of being a “net security provider” in the Indian Ocean.
Enhancing India’s maritime capability
Mazagon Dock is India’s leading defense shipyard, famous for building frontline warships, destroyers, and submarines for the Indian Navy. With the addition of Colombo Dockyard to its stable, MDL not only increases its global presence but also gets an added operational benefit.
MDL said that the takeover would assist in unlocking operational synergies, boost its market outreach and augment its research and development capabilities. Colombo Dockyard has experience in dealing with foreign navies and private maritime customers, and its shipbuilding capabilities will most likely suit India’s defence export drive under the “Amrit Kaal Vision 2047”.
In addition, the purchase is well-timed, as India has been investing in augmenting its naval capability to protect its maritime interests in the Indo-Pacific. With tensions brewing in the region—ranging from South China Sea disputes to naval militarizations—it becomes essential for India to acquire bases and assets that facilitate rapid response and upkeep of maritime superiority.
A commercial but strategic deal
The deal, MDL says, will be finalized within four to six months and will be all-cash. Formal filings confirm that the deal is an arm’s length transaction, with none of MDL’s promoter group or their related parties having any pre-existing interest in CDPLC. The process awaits regulatory and statutory approvals, including from the Colombo Stock Exchange.
From a fiscal perspective, the purchase seems prudent. CDPLC, despite having had a revenue decline in FY24 from the prior year, is still a profitable and industrious asset. Its strategic position and current facilities will almost certainly make returns both in terms of revenue and geopolitical clout.
The takeover is also likely to increase cooperation between Sri Lanka and India. In spite of previous tensions, both countries have a strong cultural as well as historical relationship. Fostering economic and defence collaboration through such operations can promote goodwill and decrease the role of external players in the region.
Looking ahead: India’s regional maritime vision
The Colombo Dockyard purchase is part of a larger Indian maritime strategy to extend reach, secure sea lanes, and counter local threats. India is already busy constructing coastal radar chains in the Maldives, Seychelles, and Mauritius and is currently developing joint surveillance programs with nations such as Indonesia and Australia.
With this transaction, India makes a bold move out of its territorial waters, employing economic means to pursue its strategic ambition. It is a change from being a reactive player to being a proactive one in the Indian Ocean and establishes the tone for future overseas defence or infrastructure acquisition ventures.
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