Rs 21,000 cr projects cleared
|Defence Minister Arun Jaitely
New Delhi: In its first Defence Acquisition Council (DAC) meeting since being voted to power in India, the Bharatiya Janata Party Led National Democratic Alliance led Government cleared Defence equipment projects worth Rs 21,000 crore, or approximately US $ 3. 5 Billion.
For the first time the Private Industry in India will be allowed to manufacture warships and medium lift transport aircraft by having direct collaboration with foreign partners, the DAC headed by Defence Minister Arun Jaitely decided today. The DAC is the highest decision making body for defence procurement. The next step is ratification by the Prime Minister Narendra Modi headed Cabinet Committee on Security (CCS). The BJP-NDA combine took over on May 26 this year.
Most notably the DAC decided that a $2.5 billion project to replace the Indian Air Force’s (IAF) fleet of 56 vintage Hawker Siddley HS748 Avro medium transports will be handled by Indian private industry – the first time that Indian Private player will build a military aircraft.
The project was floated last year, specifically excluding Defence Ministry owned Public Sector Undertaking the Hindustan Aeronautics Limiited (HAL) as an Indian contender. But pressure from Indian politicians, especially the previous Congress Government’s Heavy Industries Minister Praful Patel had held back the project. In October 2013, Patel had protested and wanted that the Public Sector Undertakings also be allowed.
|Indian Air Force Avro Aircraft
Sources in the Ministry of Defence said legal opinion was sought by this government and Patel's objection has been overruled. Now the Indian companies will need to submit proposals on how they plan to meet the requirement.
Defence Minister Arun Jaitley described this saying “ It is going to be a significant project in which the private sector will be sole player and it will lead to capacity building.”
But there is some good news for the HAL, the DAC cleared the purchase of 32 Advanced Light Helicopter for Coast Guard at a cost of Rs 7,000 crore. The ALH now has powerful ‘shakti’ engine that is derived from French engine Snecma.
Besides this, the DAC cleared the acquisition of 5 fleet support ships at the cost of Rs 9000 crore to be manufactured in India. This will also be open to private sector. The Larsen Toubro and the Pipavav shipbuilding are two private companies which have stakes in the ship building industry.
The DAC also okayed search and rescue equipments for all 3 services - IAF, Navy and Army - at total cost of Rs 900 crore
The Coast Guard will get additional fast petrol vessels and a sum of Rs 360 crore has been earmarked. The Kolkatta-based Garden Reach Ship yard will be making these ships. Another five Off Shore Patrol Vessel (OPV) will also be added to the for Coast Guard and these will be to be manufactured by the Goa Ship Yard at a total cost of Rs 2000 crore.