Crossing an important milestone at the last meeting of the Defence Acquisition Council (DAC), the Ministry of Defence has, for the first time, decided to allow Indian private entities to participate in a bid for making artillery guns.
It is learnt that while approving the Army's proposal for upgunning of 300 more 130 mm M-46 field guns to a 155 mm gun system, the DAC on April 2 also decided that the request for proposal (RFP) would also go to interested private players. The Ordnance Factory Board, which used to automatically get these orders, will now be one of the contestants.
This is the first time that South Block has decided to let the Indian private sector make an offensive weapon platform. While companies have been keen, the opportunity has never come. However, private entities such as the Tatas and L&T have been involved in making important ancillary equipment such as launchers for the Pinaka missile.
The upgunning of 130 mm guns was originally awarded to Israeli firm Soltam which completed the first lot of 180 guns but it was then blacklisted. It was no longer possible to proceed with the original plan of upgunning all 480 guns of 130 mm.
Some transfer of technology did take place but it has all remained mothballed with the gun carriage factory in Jabalpur, sources said. In 2010, the Army did float a request for information for the remaining 300 guns but the process ran into delays.
For an Army facing shortage of artillery guns, this move is also being seen as a test case for opening the doors to the Indian private sector to manufacture lethal weapon systems given the problems India faces as a major global arms importer.
Besides, the DAC meeting, headed by Defence Minister A K Antony, also gave its stamp of approval to a new process of acquisition by which buying globally would be the last option. A new gradation has now been set under which the first priority would be to 'buy Indian', the next would be 'buy and make Indian' that would allow private entities room for collaboration, after which would come options of 'buy and make global' and then 'buy global'.
This, sources said, is another step aimed at giving priority to the Indian private sector so that they can set up defence manufacturing units in India, either on their own or through collaboration. All this will be part of the new Defence Procurement Policy, which is expected to be finalised at the next DAC meeting on April 20.
Significant changes are also expected in the preparation of Qualitative Requirements (QRs) for the purchase of military equipment. The new policy is likely to make it clear that once the DAC approves a set of QRs, then no deviation would be permitted. But if necessary for any technical reason, it would have to be approved afresh by the DAC.
Insiders said that Ministry of Defence still remains opposed to increasing the FDI limit in the sector from 26 to 49 per cent. The view is that there exists a provision to approve such investment in special cases depending on the nature of technology to be transferred and that is as far as the Ministry would like to go for the moment.