Defence deals await private firms

Full order sheet:Mazagon Dock Shipbuilders is building the Scorpenes now. More orders are in the pipeline.PTIPTI

Full order sheet:Mazagon Dock Shipbuilders is building the Scorpenes now. More orders are in the pipeline.PTIPTI  

The contracts totalling Rs. 1.5 lakh crore will be taken up under the new strategic partnership model

The Union government will unveil mega defence deals estimated at over Rs. 1.5 lakh crore involving the private sector under the strategic partnership model to build a domestic defence manufacturing base in key areas such as submarines and fighter aircraft.

“It should possibly be cleared in the next few weeks, likely within the month,” a senior official told The Hindu on Sunday.

The Defence Acquisition Council approved the framework of the model on Saturday. The policy will now go to the Finance Ministry and then to the Cabinet Committee on Security for final approval, which is expected to be a formality as the Prime Minister’s Office has already been briefed on the issue.

The new model, which is a chapter under the Defence Procurement Procedure, has four segments —submarines, single-engine fighter aircraft, helicopters and armoured carriers/main battle tanks — and specifically intends to open up defence manufacturing to the private sector.

“These big companies will be the lead integrators. The contract will be spread across the Indian industry at various levels. The current model plans to build an ancillary network which works far more efficiently,” the official said.

This, he said, will indigenise the sub-systems and components and after a couple of cycles “everything should be built here”.

Pointing out that the other aspect of the policy is the export potential, the official said, “We will then get into a supply chain with the global original equipment manufacturers.”

Projects lined up

Projects already lined up under the four segments have been held up because of a delay in formulating the policy. The Ministry is gearing up to quickly roll them out once the policy is in place.

Of the four deals, submarines and helicopters are for the Navy. The single-engine fighter is for the Indian Air Force and armoured vehicle for the Army.

The deal for six submarines under Project-75I is expected to cost around Rs. 50,000 crore, the one for 100-plus fighter aircraft is estimated at Rs. 60,000 crore and the Future Infantry Combat Vehicle (FICV) programme is estimated at Rs. 50,000 crore.

Expression of Interest (EoI) will be issued to Indian companies for each of the projects, officials said. A pool of capable companies will be selected based on technical and financial evaluation and they would then tie up with a foreign OEM which will be short-listed concurrently.

Indian bidders

According to officials, for the submarines, the likely contenders are Larsen & Toubro (L&T) and Reliance Defence and Engineering Ltd., which have their own shipyards and the public sector Mazagon Docks Ltd., which is building the French Scorpene submarines.

For the fighter and helicopter segments, the likely bidders are Tata Advanced Systems Ltd. and Mahindra, both of which have a footprint in the aviation sector.

In the armoured segment, the FICV programme under way will be taken up under the SP model. L&T, Mahindra and Tata Motors are leading the race, for which bids have already been submitted.

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