'Make in India kicks off with defence deals

Aug 30 2014, 08:12 IST
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DAC scrapped the tender for 197 LUH for the Indian Air Force and the aviation arm of the Indian Army. Reuters DAC scrapped the tender for 197 LUH for the Indian Air Force and the aviation arm of the Indian Army. Reuters
SummaryDefence Acquisition Council scraps 197 LUH deal, opens it for India Inc; Rs 20K cr of deals approved.

Taking a cue from Prime Minister Narendra Modi’s Independence Day “Make in India” mantra, the Defence Acquisition Council (DAC) chaired by defence minister Arun Jaitley on Friday scrapped the tender for 197 light utility helicopters (LUH) for the Indian Air Force and the aviation arm of the Indian Army. Instead, it opened it under the “Buy and Make Indian” category, opening it for the Indian defence industry.

This means the Indian industry will now be able to make this aircraft under a joint venture with a foreign original equipment manufacturer under a transfer of technology deal. The approximately Rs 6,000-crore deal for 197 helicopters is the second after the government opened the programme for 56 transport aircraft to the Indian private sector at the DAC meeting last month.

While the decision is likely to spell bad news for European and Russian vendors vying for the contract to replace the ageing Cheetah and Chetak helicopters, sources in the defence ministry said opening the deal for the Indian industry could eventually bring in Rs 40,000 crore of business which will include producing a larger number of helicopters as well as creating a supply chain for spare parts as well as maintenance.

“The DAC retracted the request for proposal for the procurement of 197 LUH and decided that it would be under Buy and Make Indian category. It confirms the policy of the Indian government to encourage Indian industry,” a defence ministry official said.

The DAC also cleared proposals worth Rs 20,000 crore in one go, including the procurement of 22 Chinook heavy lift choppers and 15 Apache attack helicopters for the IAF by approving the offset proposals of the US manufacturer.

Jaitley also cleared the Rs 1,770-crore proposal for the navy that include equipping 11 ships — four destroyers and seven frigates — with anti-submarine warfare equipment. Also cleared was the mid-life upgrade for six submarines — four Sindhughosh class and two Shishumar class — jointly by the Russian OEM and India for Rs 4,800 crore.

The DAC also extended the “acceptance of necessity” for the indigenous Arjun Mk-II tank (basically clearing the R6,600-crore purchase for the army), and approved a mobile cellular communication system for the 3, 4 and 14 Corps (R900 crore) and 40 self-propelled guns on the MBT Arjun chassis, provided all of them successfully complete the validation trials.

Self defence

* The DAC also cleared proposals worth Rs 20,000 crore, including

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