Indian Defense Sector Opens up to Private Players; Clears $2.8 Bln of Orders

New Delhi (Sputnik) — The Indian Army has selected eleven priority defense projects worth $2.8 billion to be awarded to the private sector, in what is being seen as a bid to hasten the plugging of critical shortage.

The contracts mainly comprise development and manufacturing of arms and equipment including short range unmanned aerial vehicles, advanced robotic surveillance systems, 1200-1500 HP modular engine for tank T-90 S/SK, and third generation missile for 125mm gun barrels of T-90 And T-72 Tanks. The biggest of the contracts is the manufacturing of modular engine for T-90 tanks. The project alone is pegged at $1.5 billion.

Development of short-range remotely piloted aircraft system has an indicative cost of approximately $350 million. The Indian Army wants to purchase the robotic surveillance platform for the Rashtriya Rifles battalions which primarily tracks terrorist hide-outs in urban or built up areas.

The Indian Army has not fixed a definite timeline for such purchases. However, earlier this year, the defense ministry had indicated that arms and ammunitions worth $3 billion would be purchased from domestic manufacturers over the next decade. Till recently, projects involving the production of arms and ammunitions were exclusively awarded to government owned ordnance factories.

Due to lack of domestic orders, India’s private defense firms were not making much profit. Since the state owned ordnance factories were able to achieve only 80 percent target for over 51 percent of the total projects in the last four years, the Government decided to open up the sector to private players.

Apart from the above-mentioned contracts, the Ministry of Defense recently floated tenders for the supply of 125mm armor piercing guns for T-90 & T-72 tanks, 40mm multiple grenade launcher/under barrel grenade launcher, 30mm ammunition used by armored infantry carrying vehicle, 122mm grad rockets for Pinaka series and bi-modular charge system.

The tender requires Indian private companies to forge a joint venture with foreign firms for the purpose of manufacturing specific products with complete transfer of technology. The foreign firm, however, would not hold a major stake in such joint venture.