Government scraps seven year-old global tender for acquisition of 197 helicopters

The cancellation of the global tender for the 197 helicopters floated way back in 2007 by the UPA-1 government was perhaps the most significant step on Friday. This is for the second time in seven years that the global tender for this proposed acquisition was cancelled. The deal was worth $600 million when the tender was issued in 2007, but it is estimated that the cost may have gone up at current prices to about $1 billion (about Rs 6,000 crores).

This time the cancellation was done after allegations earlier that an Army brigadier involved in the field trials had demanded a huge bribe from one of the foreign vendors. The tender for this acquisition was cancelled originally in 2007 after alleged irregularities following which a fresh tender was issued which has been cancelled now. Of the 197 helicopters, 133 were believed to be for the Army and the remaining 64 for the IAF.

The European Eurocopter and the Russian Kamov helicopters were in the fray for the deal. The light-utility helicopters were meant to be a replacement to the ageing fleet of Chetak and Cheetah helicopters that carry troops and equipment to high-altitude areas such as the Siachen glacier. But just two weeks after Prime Minister Narendra Modi pledged from the ramparts of the Red Fort to boost indigenous manufacturing, the ministry of defence (MoD) said the acquisition of the 197 helicopters would now be as per the “Buy and Make (Indian)” category which essentially means that an Indian company can enter into a Joint Venture (JV) with a foreign firm and then bid for the contract.

Sources said the government has estimated that this will generate business worth a whopping Rs 40,000 crore for the Indian industry. After the loss of the frontline conventional INS Sindhurakshak submarine in August last year, the DAC decided that six ageing naval submarines would undergo mid-life upgrades and refits and receive a certification that would ensure that the Navy can use these submarines for a longer period of time. This will cost about Rs 4,800 crore.

Four of the six submarines are Russian-built and of these two will be sent to Russia for the upgrades and refits while the other two will undergo the refits at Indian dockyards. The remaining two German-built submarines will also undergo refits at Indian dockyards with assistance from the original manufacturer. In a major boost to the Army’s firepower, the DAC approved procurement of 118 indigenously-developed Arjun Mk II Main Battle Tanks (MBTs) for Rs 6,600 crore.

In a huge relief for the Navy, the DAC also cleared the opening of bids in the acquisition process for 16 Multi-role Helicopters for the Navy that was hit by delays. The two vendors vying for the contract are the European NH Industries (NHI) and the American Sikorsky firm. The deal was stuck since Italian firm Finmeccanica reportedly has links with NHI. Finmeccanica owns the UK-based Agusta Westland with which India had scrapped the VVIP helicopter deal this year. This shows that the Government will go ahead with badly-needed acquisitions for the armed forces under its guidelines on acquisitions involving Finmeccanica or any of its subsidiary companies.

The DAC also decided that there would be acquisition of anti-submarine warfare systems worth about Rs 1770 crore comprising anti-torpedo decoy systems and active towed array sonar under the Buy and Make (Indian) category for 11 new Indian warships that are under construction which again means that an Indian company can enter into a collaboration with a foreign company and bid for the contract.

The DAC also cleared a proposal for buying 40 Arjun tank chassis-based catapult artillery systems for Rs 820 crore, and gave its nod for setting up dedicated mobile communication systems worth about Rs 900 crore for Army troops deployed along the China border under Tezpur-based 4 Corps, Dimapur-based 3 Corps and Leh-based 14 Corps.

Traffic Collision Avoidance Systems (TCAS) will also be installed on certain defence aircraft. At the meeting, a decision was also deferred on the Rs 15,000 crore proposal for procuring the Israeli ‘Spike’ anti-tank guided missiles against the backdrop of the American offer to jointly produce the Javelin missiles for the same purpose.