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India to guarantee long-term ammo contracts to private sector

Discussion in 'Indian Defence Industry' started by layman, Apr 13, 2017.

  1. layman

    layman Aurignacian STAR MEMBER

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    NEW DELHI — India is seeking long-term deals with domestic private sector companies for a variety of ammunition at a cost of at least $3 billion over the next decade. The initiative aims to encourage capital investments by private sector companies in ammunition manufacturing facilities.

    "Currently, India solely depends for ammunition needs largely on the state enterprise Ordnance Factory Board and imports from overseas. Yet there is critical shortage in some areas of ammunition," a senior Indian Ministry of Defence official said.

    Early this month, the MoD floated a request for proposals aimed at private sector companies for the supply of 500,000 rounds of 30mm high-explosive grenades (VOG-17) for automatic grenade launchers under a 10-year contract. The RFP is part of a new MoD program known as "Manufacture Of Ammunition For Indian Army By Private Indian Industry."

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    Defense News
    India Allows Private Sector to Manufacture Ammo

    "Indigenous production of ammunition requires setting up of new manufacturing and testing facilities that are capital intensive. Notwithstanding the licenses issued for the same, the industry did not find it viable to put in investments without assured sourcing by MoD. It is for the first time that MoD is now assuring orders for 10 years with pre-committed quantities to enable industry to invest capital for setting up the required facilities," the MoD official said.

    In addition to the VOG-17 ammunition, bids also are encouraged for the supply of:

    • 125mm APFSDS-T (Armor-piercing fin-stabilized discarding sabot — tracer) ammo for T-90 and T-72 tanks.
    • 122mm extended-range multiple rocket launcher ammo for the BM GRAD.
    • 23mm HEI/APIT (high-explosive incendiary/armor-piercing incendiary tracer) ammo for ZU-23 air defense guns.
    • 30mm HEI/T (high-explosive incendiary — tracer) ammo for BMP-2 infantry combat vehicles.
    • 40mm MGL/UBGL (multiple grenade launcher/underbarrel grenade launcher) ammo.
    • Electronic fuzes for artillery guns.
    "Although RFP has been issued for some of the specialist ammunition for tanks and artillery guns, BM-21 charges, and electronic fuses for Russian-made multi-barrel rocket launch system GRAD, none of them are currently being manufactured in India," said Bhupinder Yadav, a defense analyst and retired Indian Army major general.

    Indian private sector companies participating in the manufacturing of ammunition for the first time include leading industrial houses Chowgule Group, Kalyani Group, Reliance Defence and Engineering Limited, and Godrej & Boyce. Several small and medium-sized private sector companies include Indtech Construction Private Limited, HYT Engineering Company Private Limited, Micron Instruments, Premier Explosives Limited, Solar Industries India Limited, Himachal Futuristic Communications Limited and Continental Defence Solutions Private Limited.

    Several overseas defense companies are negotiating with private Indian companies to provide cutting-edge technology for multiple Indian ammunition programs. These include Expal of Spain, Nexter of France, Rosoboronexport of Russia, Chemring Group of the United Kingdom, Saab of Sweden, Elbit of Israel, Rheinmetall Defence of Germany, Diehl Defence of Germany, Denel of South Africa, Yugoimport of Serbia, Bumar of Poland, Orbital ATK Armament Systems of the United States and Arsenal of Bulgaria.

    The RFP, however, stipulates tough conditions for the transfer of technology. The MoD prefers the manufacturer develop the infrastructure and absorb the complete transfer of technology for the production of the ammunition within a stipulated period ranging from two to five years, after which the contract would be canceled and the bank guarantees forfeited.

    The critical technologies identified in the case of the ammunition are the fuze, propellant and cartridge case.

    "As most of the Indian Army inventory is of Russian origin, and in the past we did not bother about transfer of technology or absorbing in our country for spares and consumables such as ammunition — coupled with complacency of government sector in defense production — we became perpetually dependent on import," Yadav said.

    The response from overseas companies about forging joint ventures in the ammunition sector has been lukewarm, according to the MoD official.

    As of now, only private sector company Bharat Forge Limited, a subsidiary of Kalyani Group, has announced a joint venture company, BF Elbit Advanced Systems Private Limited, to manufacture a multitude of ammunition types and smart bombs in India.

    "It is not viable to establish and scale up globally competitive ammunition manufacturing facilities without sustained (anchor) orders," an Indian Army official asserted.

    Referring to the scope of the latest RFP, the official said: "Private sector defense companies in consortia mode do possess capabilities to produce ammunition and are equipped to engage with global original equipment manufacturers for setting up manufacturing facilities and absorb critical technologies in time-bound manner."

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    India is facing a critical shortage of a variety of ammunition.

    The autonomous Indian auditing agency, Comptroller and Auditor General, or CAG, in its 2015 report said the mandatory war wastage reserve of ammunition, which should be 40 days, is only for 10 percent of ammunition. Of the total 170 types of ammunition, there is a shortage in 125 types, the report noted.

    Ordnance Factory Board is the main source for the supply of ammunition to the Indian Army. However, the agency has consistently failed to supply the targeted quantity, with shortfalls ranging up to 73 percent of the total types of ammunition, according to the CAG report.

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