New Delhi: The Indian Navy is hoping to conclude contract negotiations and sign the mega deal for six new conventional diesel-electric submarines with better stealth features this fiscal, in what will be a culmination of a nearly 30-year journey, ThePrint has learnt.
Sources in the defence and security establishment told ThePrint that Navy is catering for signing of the Project 75 India (P75I) contract by end of March next year and is looking at even making the first tranche of payment.
Regarding the cost factor, the sources said that negotiations are still on and the state-run Mazagon Dockyard Limited (MDL), which has tied up with German firm ThyssenKrupp Marine Systems (TKMS), has “significantly” brought down the cost.
It is learnt that this would be the most expensive conventional submarine contract to be signed in the world even though cost has been brought down.
As reported by ThePrint earlier, when the project received a fresh Acceptance of Necessity (AoN) in 2018, it was benchmarked at Rs 43,000 crore. However, MDL and TKMS’s bid crossed Rs 1.2 lakh crore, with GST pushing it even higher.
When the MDL-TKMS bid was chosen earlier this year, the Germans were sounded to pare the costs down, with the Navy hoping to finalise the deal in the Rs 60,000 crore–70,000 crore range.
However, it is learnt that despite the cost being brought down by the MDL, the primary contractor, the deal may cost around Rs 90,000 crore, almost double of what was earmarked in 2019.
The sources said that since the initial bid, there has been a new management at MDL, which negotiated with the Germans and brought the cost down.
According to the request for proposal (RFP), the first submarine must be delivered seven years after contract signing with 45 percent indigenous content, followed by one each year until the programme reaches 60 percent localisation.
This means that even if a contract is signed tomorrow, the first submarine will be delivered only in 2032, and that too, if there is no delay.
The sources are apprehensive that technical consultations and design verification could take time. While TKMS is seen as a reliable partner, the sources remained sceptical of the MDL claim of delivering the first submarine within 7 years of signing the contract.
The Strategic Partnership model, under which the project is being executed, was meant to break the monopoly of state-run yards by bringing private players into submarine building.
But with only L&T qualifying in the private sector, the Navy roped in MDL as well for the P75I. TKMS, initially in talks with L&T, ultimately switched sides to MDL, sensing a possible single vendor situation.
L&T later tied up with Spanish firm Navantia and bid for the project. However, their bid was disqualified on the ground that the Air Independent Propulsion (AIP) system that allows the submarine to remain under water for longer durations has still not been integrated with a sea sailing boat.
Because of this, the sources said, there was no price discovery made and the German bid was accepted.
The new TKMS submarines will be built on an entirely new design, not based on its proven Type 212/214 platforms. Unlike the conventional rounded hulls, the new design will feature angular lines for reduced sonar signature, TKMS CEO Khalil Rahman had told ThePrint in July last year.
This meant that the submarine design would not be as mature as those already built by the TKMS even if inspired from the existing design. However, it is now learnt that the new design will be based on Type 214 and will be larger than it is. The new design is in the last stages of being finalised, the sources said.
(Edited by Tony Rai)
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