The defence ministry has cancelled two arms import contracts for the army worth over $ 2.5 billion that were in the final stages, preferring to go for the Make in India route. In a special meeting held on Tuesday, chaired by the Defence Secretary, it has been decided that plans to procure close quarter carbines from a UAE based company and a program to import Self Propelled Air Defence systems from South Korea are being scrapped.
The meeting, which was also attended by Chief of Defence Staff Gen Bipin Rawat, concluded that the contracts will now be placed under the Make in India initiative to give a boost to the domestic industry, sources said.
It is not clear under which clause the procurements would proceed but the army has projected an urgent requirement for close quarter carbines and had been processing the deal under a fast track process. As reported by ET, a view within the government was that with recent announcements on Atmanirbhar Bharat, as well as representations from domestic companies promising an equivalent product for sale, the import case needs to be cancelled.
A UAE based arms manufacturer Caracal had been shortlisted to supply 93895 close quarter carbines for the army has written to the defence ministry after it emerged as the lowest bidder for a fast track procurement by the army in 2018.
The case was tricky, given that the Caracal group had not been originally included in the list of companies to which tenders were to be issued in 2018 by the army. It only managed to enter the competition after the Acquisition wing of the Defence Ministry recommended its inclusion. Fed up with delays in the acquisition case that was to be fast tracked, the Army had recommended either the case has to be shut down or should move to the next stage of contract negotiation at the earliest.
The acquisition case for Self Propelled Air Defence Gun Missile System (SPAD-GMS) – the Indian Army wants five regiments of the guns that can be deployed with forward moving forces and can be quickly relocated on the basis of threat perception – has also been cancelled after South Korean company Hanwa’s K 30 Biho was shortlisted by the Army.
The estimated $ 2.5 billion contract for new air defence systems for the Army has been hanging fire since last year after Russia protested that it had been unfairly disqualified from the competition in which the Korean company was shortlisted.
Both the Russian upgraded Tunguska M1 and Pantsir missile systems failed to qualify for the acquisition of 104 system that are needed by the Army, promoting a formal complaint to the Independent Monitors (IMs) set up within the MoD to monitor acquisition cases.
As reported by ET the IMs recommended that the Russians be given another chance to prove the system. This however, was found to be unfair by the acquisition wing that had pointed out that a re-trial opportunity at this late stage would set a dangerous new precedent and would vitiate the principle of a level playing field.
While the recommendation was to expedite the contract negotiation or move for a retrial at the earliest, the contract has now been scrapped keeping in mind new plans under the Make in India initiative.
The two programs would come as a welcome surprise for the Indian industry, particularly the private sector, which has developed capabilities over the past few years to manufacture such systems domestically.