Defence Minister Sitharaman gives Army’s delayed FICV project a push

September 26, 2019 posted by

Welcome to World Action and Reaction News…
todays News is. Defence Minister Sitharaman gives Army’s delayed
FICV project a push The $12-billion project to procure 2,300 Futuristic
Infantry Combat Vehicles (FICV) for the Indian Army, which has been held up for over a decade,
has received a fresh push from Defence Minister Nirmala Sitharaman, who took charge of the
ministry less than a month ago, reported the Hindu Business Line. According to the report, apart from the state-owned
Ordnance Factory Board (OFB), which has been nominated for the project, Larsen & Toubro
(L&T), Tata Motors, Reliance, Mahindra, and Tata Power SED-Titagarh Wagons are also in
the race. All these firms had responded to the expression
of interest (EoI) in 2015. The financial daily reported that Sitharaman
has sought details of the project and that an informal meeting was held on Tuesday. Further, citing sources, the report said that
the matter would come up before the Defence Procurement Board on September 26. The minister, according to the report, may
also bring up the project when she meets US Secretary of Defence James Mattis, who will
come to India on a two-day visit later in September. On the other hand, Russia, the report added,
is also keen on clinching the deal through the OFB. With some critical technologies related to
the project slated to be sourced from foreign firms and global defence majors like General
Dynamics, Lockheed Martin, BAE Systems, and Rheinmetall eyeing the deal, the defence ministry,
according to an anonymous official cited by the report, is considering pushing the deal
through under the Strategic Partnership Policy (SPP). According to the official, the SPP route is
viewed as “an easier and cleaner way” by many within the defence industry. The SPP aims at creating capable defence manufacturers
in the private sector, to compete with the DPSUs and Ordnance Factories that have historically
dominated defence manufacture in India. The policy requires private firms chosen as
strategic partners to enter technology partnerships with nominated global original equipment manufacturers
and jointly bid for contracts to build aircraft, helicopters, submarines, and armoured vehicles
for the military. Back in January 2016, the defence ministry
had announced that while the private sector companies would compete to develop the FICV,
the OFB would be nominated without competing as a third development agency. The ministry’s EoI, which invited ten companies
on July 16, 2015, to submit proposals to develop the FICV under the “Make” procedure, specified
that two development agencies would be chosen. However, even as that competitive selection
was underway, the OFB was given a free pass. A welcome signal? This development may come as a welcome signal
for domestic private defence players, especially those aiming to build and sell land defence
systems. As reported in January this year, the ministry
of defence was back then planning to kill competitive tendering for a Rs 5,000 crore
project to upgrade the Army�s 1,500 BMP-2 infantry combat vehicles, in a move that defence
expert Ajai Shukla had described as “a negative signal that will resonate discouragingly through
India�s private defence industry”. Instead, the project was slated to be gifted
to the OFB without competition. Capable private firms like L&T, Tata Motors,
the Mahindras, Reliance Defence, and Alpha Design Technology Ltd, which were entrusted
with designing, developing, and manufacturing an FICV for the Army under a “Make in India”
contract, were eliminated, without explanation, from the relatively simple task of upgrading
the BMP-2 to grant it a lease of life until the FICV enters service. Back then, private defence firms had decided
to fight to remain in the fray. Industry chamber Ficci had written to the
MoD requesting permission for industry to present its case at a crucial meeting of the
Services Capital Acquisition Plan Categorization Higher Committee, which would rule on who
would upgrade the BMP-2. However, in July this year, defence publication
Janes reported that the MoD had approved a Rs 2,400 crore upgrade project for 693 of
the Army’s BMP-2/2K Sarath infantry combat vehicles. According to the report, the Defence Acquisition
Council, headed by then defence minister Arun Jaitley, awarded the contract to Bharat Electronics
Limited and the OFB, in a move that industry sources said contravened the MoD’s own defence
procurement policies that mandate competitive bidding for the acquisition process.

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