Defence ministry causes confusion, ‘okays’ project for which tenders were issued in March

Union Defence Minister Nirmala Sitharaman.
Union Defence Minister Nirmala Sitharaman. Photo by Sonu Mehta/Hindustan Times via Getty Images

Govt release credits minister Sitharaman for promoting Make in India in defence sector; ministry sources say this could be because ‘final version’ has now been approved.

New Delhi: A Ministry of Defence (MoD) ‘approval’ issued Wednesday for involving the private sector in manufacturing ammunition has created confusion. This is because the project had already been cleared in January this year and the tendering process has reached an advanced stage, including several extensions to bidding dates which have frustrated potential vendors.

A government press release said that Defence Minister Nirmala Sitharaman had taken “another step in the direction of Make in India in the defence sector”, to “facilitate development of indigenous capacity”, by approving the manufacture of eight types of ammunition by private industry. The release said the minister approved “a long term contract of 10 years with the selected ammunition manufacturer, to facilitate a viable commercial model”, and that the selection would be done through an open tender, two-bid process.

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However, official Indian Army documentation shows that tenders for these eight types of ammunition had already been issued in March this year, with complete details of the project shared with potential vendors. Bidding dates for the tender have been extended at least six times, with the latest being another extension until 11 January 2018.

The tender has also been mired in controversy, given that foreign firms blacklisted in India for corruption charges have been allowed a backdoor entry – they can be ‘technology partners’ with Indian companies.

Asked why the press release was claiming this as a new development, when it has been in the pipeline at least since March, sources in the MoD said the reason was that a ‘final version’ of the tenders had been approved by the minister.

Timeline of the plan

According to government officials, the plan to involve the private sector in manufacturing the eight types of ammunition was cleared by previous defence minister Manohar Parrikar in late 2016, with final approvals coming in January this year. Tenders for all eight types were issued in March.

However, the dates for submission of bids have since been extended repeatedly, as vendors have faced multiple problems, including the large amount of earnest money demanded, as well as bank guarantees required for the 10-year supply project.

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Industry representatives have asked for several amendments to the tenders that would allow them to participate. Sources said it is perhaps these amendments that have now been cleared by the ministry, and could be added as a corrigendum to the existing tenders. In case, the variations are huge, the original tenders can be withdrawn and fresh ones issued.

The tenders that have been issued include lakhs of rounds of 30 mm HET, BMCS 125 mm FSAPDS, 122 mm HE ER Rocket, 40 mm MGL & UBGL, 23 mm HEI/APIT, 30 mm VOG, and electrical fuzes for artillery.

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