Defence ministry to clear projects worth Rs1,30,000-cr by year-end: report

The government is set to clear mega contracts worth a total of Rs1,30,000 crore ($20 billion) with the defence ministry taking up three long-pending projects for which Expressions of Interest were issued way back in 2010 and 2013.

During a meeting with representatives of industry majors last week, defence minister Nirmala Sitharaman and defence secretary Sanjay Mitra are believed to have assured the industry of clearing the deals by the year-end, says a report in the Hindu BusinessLine.

The projects include a Futuristic Infantry Combat Vehicle (FICV), Tactical Communication System (TCS) and the Battlefield Management System (BMS), all of which would enable the Indian Army to take a quantum leap in modern warfare systems.

These futuristic projects, to be offered under the government's 'Make in India' programme, have been stuck on the mode of selection of contractors, which have bee under discussions for almost a decade now.

Sitharaman is now reported to have assured the industry that decisions on these three projects will be expedited and approved in a time-bound manner by the Cabinet Committee on Security (CCS) chaired by Prime Minister Narendra Modi, BusinessLine quoted sources as saying.

There were issues raised by the industry over the selection process and it seems some of these mega projects got stuck on the issue of placement of development orders. The government will now identify the manufacturers for prototype manufacturing before a final approval, according to the report.

The long delays in project approvals are detractors for Indian defence firms as well as their international technology partners who have established joint ventures, and signed memorandums of understanding (MoU) for critical technologies.

However, the process is lengthy and even after the selection of the prototype manufacturer, actual production and placement of orders will take another decade.

Under the $12-billion FICV project the government was to purchase over 2,300 units of such vehicles for the Army. Private sector majors like L&T, Tata Motors, Reliance, Mahindra and Tata Power SED-Titagarh Wagons have been vying for the project. The government has also nominated the Ordnance Factory Board (OFB) for the deal.

International firms offering technology and product services for the FICV project included General Dynamics, Lockheed Martin, BAE Systems and Rheinmetall.

The TCS and BMS programmes worth around $8 billion are now undergoing yet another round of valuation by the Army.

While the BMS seeks to integrate all the combat units of the Army such as artillery, infantry battalions, armoured and others, the TCS is meant for offensive operations.

For the BMS, some of the global OEMs queuing up for these projects are Israel Aerospace Industries, Rafael and Elbit of Israel; Thales and Nexter of France; Rhode & Schwartz of Germany; BAE Systems of the UK; Lockheed Martin, Raytheon and General Dynamics of the US; and, Selex of Italy.