Nod for $1.9-bn defence procurement proposals (Lead)

June 22nd, 2012 - 9:45 pm ICT by IANS  

New Delhi, June 22 (IANS) India’s defence ministry Friday gave its approval to three key proposals from the Indian Air Force (IAF) and the Indian Navy to buy 14 new Dornier reconnaissance planes, 116 warship guns and for a nationwide command and control communication network, cumulatively worth nearly $1.9 billion.

The decisions were taken at a marathon two-and-a-half-hour Defence Acquisition Council (DAC) meeting chaired by Defence Minister A.K. Antony, ministry officials said.

The IAF proposes to buy the Dorniers to boost its fleet from 41 to 55.

The approval from the DAC was for buying these planes from the Bangalore-based defence public sector undertaking Hindustan Aeronautics Limited (HAL), officials said. The order is worth Rs.1,000 crore ($200 million).

The communication network for the IAF, called the Air Force Net (AFNET), had been launched as a pilot project by the IAF in September 2010.

“With the pilot project turning out to be a success, the DAC gave its approval to expand the network into a nationwide system,” the officials said. “The nationwide project will cost about Rs.7,000 crore ($1.4 billion),” they added.

The third procurement that was approved at the meeting was the Indian Navy’s, to procure new 30mm guns for its warships. The 116 guns - worth Rs.1,500 crore ($300 million) - will have electro-optic fire control systems.

The first lot of these guns are to be directly imported and the rest manufactured in India under a technology transfer contract.

At the meeting, attended among others by the three services chiefs, defence secretary, defence production secretary and the director general acquisition, Antony called for increasing the capabilities of the defence PSUs to enable indigenous manufacturing of military systems.

He also wanted the practice of nominating of defence PSUs for defence systems manufacturing to be discouraged, thereby encouraging greater competition among both the public and private sector defence companies.

Antony was also quoted by officials as saying that nomination of of defence PSUs will be done only in rarest of rare cases, when the military equipment is operationally very important and the local capacities will not met the time and quality parameters for procurement.

The meeting, which was to discuss more acquisitions, did not take up the other proposals for discussion.

One of the proposal was for buying eight regiments of Quick Reaction Surface to Air Missiles (QRSAMs) that can engage targets at 15-km range at a minimum altitude of 6,000 metres in under six seconds to replace the Russian Kvadrat system, worth Rs.12,000 crore ($2.4 billion).

Another proposal not discussed was the procurement of 1,300 light bullet-proof vehicles in the ‘Make Indian’ category, open only to Indian defence manufacturers, worth Rs.720 crore ($144 million).

The DAC was also to approve the changes that the ministry wanted in the offsets clause in its Defence Procurement Procedure (DPP). That too was not debated by the DAC members, the officials said.

The 2011 DPP stipulated offsets that mandates foreign vendors to plough a minimum of 30 per cent of defence deals worth over Rs.300 crore ($60 million) back in Indian defence, aerospace and homeland security industries and training related to these sectors.

Offsets are a provision in global defence business practiced by nations that want to energise their indigenous defence industry.

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