But public sector units bag other projects worth Rs 21,000 crore
The BJP-led NDA Government on Saturday decided it will only be the private sector that will manufacture small transport aircraft to replace the existing fleet of 56 Avros. The Rs 13,000-crore project was put on hold by then Defence Minister AK Antony following opposition from former Union Minister Praful Patel on the ground that the PSUs should also be allowed to compete.
The Defence Acquisition Council (DAC), which gave the go-ahead for this project, also cleared other projects worth over Rs 21,000 crore — one of the highest in monetary terms in recent times. Significantly, most of these projects have gone to PSUs — including HAl, Goa Shipyard and Garden Reach Shipbuilders and Engineers limited — signaling the new Government’s seriousness in boosting the domestic military industry in a big way. The manufacturing of all the DAC-cleared equipments will be entirely in India.
The Modi Government recently hiked the FDI limit in defence to 49 per cent from the earlier 26 per cent and pruned the list of defence items whose production requires manufacturing licences. This step is aimed at helping small and medium scale industries to avoid red tape and encourage entrepreneurs to enter defence industry.
The DAC, chaired by Defence Minister Arun Jaitley, met here on Saturday for the first time after the Narendra Modi-led dispensation came to power. The entry of the private sector in the aerospace arena is for manufacturing planes to replace the 56 ageing British-made Avro aircraft. While the first 16 aircraft will be bought off the shelf, the remaining will be manufactured in India by the private sector in partnership with foreign manufacturers.
Patel had objected to the decision to keep out the PSUs while the Defence Ministry then maintained that it was a conscious step to give a fillip to the fledgling private industry. Facing criticism, the Government then put the project on hold.
After getting due clearance from the law Ministry recently, the NDA Government decided to go ahead with the project as “originally conceived” by the earlier regime, officials said here on Saturday. They said this is the first project of its kind which will “lead to capacity building” of private sector.
The tenders for it were issued in May 2013 to over 10 international aviation majors — including Embraer, lockheed Martin, Airbus, Ilyushin, Casa, Saab and Alenia Aeronautica. The Government has extended the date to August 28 for submitting the tenders or request for proposals (RFP), officials said.
As regards the other acquisitions cleared by DAC, the list included five fleet support ships worth over Rs 9,000 crore and private and PSU ship-builders will vie for the Rs 9,000-crore contract. These ships provide logistical support like fuel, rations and weapons to aircraft carriers and destroyers in sea. Incidentally, the last DAC meeting was held on February 24 under the chairmanship of Antony.
Meanwhile, the other big ticket item includes a Rs 7,000 crore project for 32 advanced light helicopters (AlH) for Coast Guard and Navy and HAl will manufacture these helicopters.
Goa Shipyard has bagged the Rs 2,000 crore contract for manufacturing five off shore patrol vessels for Coast Guard while GRSE will build five fast patrol vessels and this deal is about Rs 360 crore. A Rs 900-crore project for search and rescue equipment for three Services also got the nod from the DAC, officials said, adding the meeting lasted for about three hours. The three Services Chiefs, the DRDO chief and the Defence Secretary participated in it. Jaitley later said several other projects in the pipeline were also discussed. “We have tried to expedite quite a few of them in today’s (Saturday’s) meeting,” he added.
Domestic military industrialization
Rs 9,000 crore tender for five fleet support ships. Indian private and public sector ship builders will compete for this contract
Rs 7,000 crore contract to HAl to manufacture 32 advanced light helicopters (AlH) for Coast Guard and Navy
Rs 2,000 crore contract to Goa Shipyard for five off-shore patrol vessels for Coast Guard
Rs 900 crore project for search and rescue equipment for three Services
Rs 360 crore order to GRSE for five fast patrol vessels for Coast Guard