Saturday, 30 August 2014

Govt clears defence deals worth Rs 17,000 crore


Also opens doors for US choppers (the AH-64E Apache above, and the CH-47 Chinook) worth Rs 15,000 crore

By Ajai Shukla
Business Standard, 29th Aug 14

The Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government has made its first big decisions on equipping the forces, clearing acquisitions and renewals worth Rs 17,000 crore on Friday.

The apex Defence Acquisition Council (DAC), which met at New Delhi to clear the purchases, emphatically favoured manufacturing in India, even when clearing the procurement of foreign equipment. A long-running tender for buying 197 light utility helicopters (LuH) from the global market has been scrapped, and will be re-issued in the “Buy & Make (Indian)” category. This requires Indian companies to build the LuH in India, in collaboration, if necessary, with foreign partners.

“In accordance with the government’s policy, this will create manufacturing jobs, benefiting Indian industry to the tune of Rs 40,000 crore”, said a senior MoD official who briefed Business Standard on the outcome of the DAC meeting.

Immediately benefiting from this decision will be public sector aerospace behemoth, Hindustan Aeronautics Ltd (HAL), which has already worked for four years on developing an indigenous LuH. In 2010, the ministry of defence (MoD) had split the military’s requirement of 384 LuHs into two --- with 197 being procured over-the-counter (now cancelled); and HAL assured an order for 187 helicopters, provided this was developed by 2017.

“We appreciate this decision by the government. It is an important step towards indigenising aerospace capabilities,” says RK Tyagi, the HAL chief.

HAL’s progress on the LuH has been slowed by difficulties in selecting an engine for the helicopter, Defence Minister Arun Jaitley told the Rajya Sabha on Aug 12.

The emphasis on indigenisation is evident also in the decision to overhaul and refit six of the navy’s 13 submarines. The so-called Medium Refit and Life Certificate (MRLC) programme is a two-year process that involves stripping down the submarine, repairing its hull extensively, and replacing worn parts.

The Rs 4,800 crore sanction clears the overhaul of four Russian-origin, Kilo-class, and two German-origin HDW submarines. Of the Kilo-class vessels, two will be refitted in Russia, and the other two in the naval dockyard in Mumbai. Mazagon Dock Ltd, Mumbai, will overhaul both HDW submarines.

Support to the indigenous Arjun main battle tank (MBT) continues, with the DAC renewing a Rs 6,600 crore clearance for 118 Arjun Mark II tanks. This will equip two army tank regiments, adding to an earlier order for 124 Arjun Mark I tanks.

The United Progressive Alliance government had already cleared 118 Arjun Mark IIs. That clearance had expired since the army has been evaluating the prototype tank for two years. Today’s renewal allows the army to order the tanks from Heavy Vehicles Factory, Avadi, when trials are completed.

Further support was extended to the Arjun tank project through the clearance of 40 self-propelled artillery guns, worth Rs 820 crore. This gun system, termed a “catapult”, consists of a 130-millimetre gun mounted on a Arjun tank chassis, allowing it to keep up with tank columns and provide them fire support in battle.

The catapult will be developed by the Central Vehicle R&D Establishment in Chennai, and then offered to the army for trials.

In a decision that will please Washington in the run-up to Prime Minister Narendra Modi’s visit next month, the DAC cleared offset proposals relating to the purchase of two Boeing helicopters --- 22 AH-64E Apache attack helicopters; and 15 Chinook heavy lift helicopters. This removes the last hurdle to signing the two contracts, together estimated to be worth Rs 15,000 crore.

Boeing has declined to comment, but company sources say this is a key step that could allow the contract to be signed by the year-end.

In a clearance critical for the navy’s operational readiness, the DAC approved the Rs 1,770 crore purchase of Integrated Anti-Submarine Warfare Suites (IADS) for 11 warships --- seven frigates being built under Project 17A, and four destroyers being built under Project 15B. As Business Standard first reported (May 16, 2014 “Warships in peril as defence ministry blocks sonar purchase”) the MoD had blocked the import of crucial sonars since the late 1990s, rendering 25 major Indian warships --- including the INS Kolkata and INS Kamorta, commissioned this month by the prime minister and defence minister respectively --- extremely vulnerable to attack by enemy submarines.

The navy will also get relief with the DAC permitting commercial bids to be opened in the Rs 1,800 crore tender for 16 naval multi-role helicopters, which fly from warships and detect enemy submarines. With one of the two vendors --- NHIndustries, part-owned by Finmeccanica --- now banned, this has the potential for the other vendor, US company, Sikorsky, to win the contract.

Also cleared was a Rs 900 crore dedicated mobile communications system for army troops deployed in Ladakh and the eastern command. Since border areas are poorly covered by commercial mobile service providers, the army intends to establish its own mobile network all along the borders.



Equipment
Action
Financial effect



197 Light Utility Helicopters
Tender scrapped
---
6 submarines
Refit part in India
Rs 4,800 crore
118 Arjun Mark II tanks
Build in India
Rs 6,600 crore
40 Catapult SP guns
Build in India
Rs 820 crore
22 Apache and 15 Chinooks
Buy overseas
Rs 15,000 crore
Sonars for 11 warships
Buy overseas
Rs 1,770 crore
Naval multi-role helicopters
Buy overseas
Rs 1,800 crore
Army mobile network
Build in India
Rs 900 crore












15 comments:

Ratan said...

We should not read too much in the meetings in DC next month.. surely they will be pleased with the development but is not leading to an agreement yet, surely, talks will be on the agenda and the push for more hardware too.
Not really sure, how much of this will see the light of the day in this FY as capital allocation will not cater for it. Boeing surely is smiling its way to the bank..
Good thing about LUH being scrapped.. I was a part of the trial team that eons ago, originally looked at the Cheetah replacement before St A came in as the Mandarin of the SB and started scrapping every thing that the armed forces required..

Ghorcharrah Gabbar said...

I don't see a method in the madness here. Why the hurry for Arjun Mark 2s even though they haven't cleared trials not had the Army sought more? 'Catapults' on a Arjun hull - pah ! What sort of patronage is this ? Why is the Air Force getting Apaches ? The role(s) envisaged by the IAF for the Apaches - SAR support, airfield protection - is patent underemployment to put it mildly. What about the M777s ?

Too many gaps and turf battles evident.

Suchindranath Aiyer said...

Without prejudice. When do you think India will be able to produce its own weaponry. Reliably, economically, fit for purpose and on time?

Anonymous said...

Does this mean that Navy helicopters order would go towards bell 429 wheeled version?

P.K.Chaudhuri said...

India's new PM, Mr. Narendra Modi has appealed for increased indigenous manufacturing. First step for this is to sell twenty percent stocks of Defence PSUs in the share market. This will improve their efficiency and increase transparency in their operations. Please review the case of BEML. After listing the PSU in share market, its efficiency and working transparency has increased significantly. This action also will solve current account deficit significantly.
All defence PSUs must start exporting their products. First of all India must start exporting at least ten ALH Dhruv Helicopters. It is time we must develop Dhruv Mark V.

c gupta said...

Their decision is truly Modification and exactly what is our honourable prime ministers dream. He wants India to be an export house and Light helicopters is one thing we can make for sure (smart I must say). I although hope HAL leaves its babugiri and focuses on completion for a change.
Ajai another thing why would we need Apache if we are getting the LCH and Rudra; just for a thought.
Chinook is a good buy and in every sense it would be better if we double the order as we just cant make it.
Also what is the TOT in these two deals, we have no mention of that.
The decision however to buy the Apache seems impractical and would have made more sense to take the naval choppers. I know they are to open bids but I am not for the Apache.
The sonar buy another excellent pick, Congress govt just sucked and kept on sucking the blood out of our forces.
About the Arjun Catapult, we are spending 900cr on 40 systems. This is approx $150 million. If I am not wrong we can get 100 tracked K9 from L&T for $350 million, just seems too expensive. I would rather think it makes sense to take 200 each of the Dhanush and Bharat52 gun. That is $800 million at 2 million a piece and 300 K9 at a billion. This would get the army with 700 new guns. Upgrading the M46 guns should be priority and a stop gap. Why do we make thing so complicated, when it can be simply sorted out.
I must conclude by saying that Jaitly under Modiji is doing a stunning job in terms of trying to shape the defence industry of the country.
However they must not forget the basic stuff like artillery guns and MLRS systems. Pinaka another example, we have only 80 systems in service, where we should have at least 300. Similarly LCA MK1 at least 80, IAF and IA good morning please wake up and buy the stuff we produce. IN rocks....
Verdict: I think Buy Indian is the future, you cant make defence forces by importing.

Ram Bharadwaj said...

Hi Ajai
The 11 nos for Integrated Anti-Submarine Warfare Suites (IADS) are for Project 15B and 17A.

What about the ATAS (Towed Array Sonars) for Kolkatta class and others???

I believe the DRDO "Nagan" is heading nowhere.

Anonymous said...

Dear Shri Shukla,why have your posts become fewer and far between.

Krish said...

Wonderful summary Colonel. Wish TOI and other media people also are clearer in their reporting.

They mess up so much, just to keep up with the speed. They don't understand that people want credible news, not some half researched, half known cooked up report.

Thanks once again.

Dinesh said...

Sir, What is your opinion on the recent reports on India today that the PAK-FA deal is in trouble. In old article you had supported acquisition of F-35s.

kulari94 said...

Ajai,

That's an awesome pic.

Anonymous said...

with arjun mk-2 india has a winner and game changer . To keep it in tune with the very best DRDO CVRDE
MUST UPGRADE THE TANK IN BLOCKS OF 150 TO 2OO. SOME OF THE MODIFICATIONS UPGRADATIONS TO KEEP IT AHEAD ARE .1) FIREPOWER: TRY TO INCREASE THE SPEED TO OVER 1750 TO 1900MTS/PER SECFROM THE BARREL WITHOUT EXTENSIVE WEAR AND TEAR, BY USING NEW METALLURGY DESIGN AND INNOVATIONS WITH THE HELP OF COMPUTERS INCREASE THE FEUL STOWAGE FOR 650KM RANGE . INCREASE STOWAGE OF SHELLS TO 50. USE BETTER COLOURED MONITORS AND INFRARED , LASER , TV sights . Use of multicalibre Apam/THERMOBARIC shells. max armour be increased to 1200mm and allround armour 1100mm
. The weight be reduced to 54 tons . For mobilty a 1800 to 2100kw eng to increase the power to weight ratio to nearly 30 with max speed over 85km /hr and crosscountry over 50km.THE INCREASE IN NO OF GRENADE LAUNCHERS TO 24 AND A FULL AUTO 14.7MM GUN MOUNT. COLLABORATION FOR SLOPING AND SMALL TURRET DESIGN WITH ISRAEL/US, ARMOUR IMPROVEMENT WITH AMERICAN RUSSIAN AND GERMAN COMPANIES , ELECTRONICS , COMPUTERS WITH KOREAN , JAPANESE AND FRENCH COMPANIES , METALURGY WITH GERMAN, FRENCH JAPANESE COMPANIES . ENGINE DESIGN WITH UKRAINIANS AND RUSSIANS AND GUN DESIGN AND METALURGY WITH RUSSIAN , GERMAN HELP . WITH CONCENTRATED AIM IN MIND AND UPGRADATION OF BUILD AND DESIGN CENTRES OF THE HEAVY VEHICLEFACTORY CHENNAI, THE ARJUN MK-3,4,5 ,6 CAN BE BUILT TOBE THE WORLDS BEST TANK OUTGUNNING, OUTRUNNING AND BETTER PROTECTED THAN THE CHINESE T-99 OR ALKHALIDS OF PAKISTAN WHICH IT WILL FACE IN A FUTURE BATTLE .WITH 5, 7 AND 9 AXIS CNC MACHINES BEING USED FOR FINISH AND SAVINGS OF WEIGHT .USE OF CERAMIC , CARBON , TITANIUM ,STEELARMOUR TO REDUCE WEIGHT TO 54 TONS WILL GIVE INDIA THE ULTIMATE TANK.


Anonymous said...

Were all 197 helicopters meant to be imported under the scrapped tender?

Parthasarathi said...

I am totally agreeing with Mr. C Gupta. It is absolutely non sense to procure 130 mm 50 years vintage back dated gun at such a exorbitantly high price. When we can buy another Indian make 155mm/52 howitzer at almost same price ! And what about Bharat 155/52 howitzer. According to Bharat forge the price of each howitzer would be around 15 cores. And we are going to spend around 25 cores for a second world war vintage. And why we need a Arjun chassis for that gun ?
There is no encouragement for Indian private sectors.

Anonymous said...

DEAR COL,

THE WISH LIST FOR THE ARJUN TANK AS NUMERATED ABOVE, IS IT FEASIBLE . WITH YOUR VAST ARMOURED CORPS EXPIERENCE , AND VISITS TO DRDO , HEAVY VEHICLE FACTOR AVADI AND ACCESS TO THE MOD AND ARMY HQ /DRODO SCIENTISTS , KINDLY COMMENT WHAT IS FEASIBLE OR NOT FOR YOUR READERS