INDECISION ON PROCURMENT COSTS INDIA DELAY ULTRA LIGHT GUNS WOULD COST DOUBLE.
By Bulbul Singh
28 Aug 13. Delays in finalizing the purchase of Ultra Light Howitzer guns from the U.S. subsidiary of BAE Systems has led to a nearly doubling of the price in the last three years, on account of costs due to inflation and mainly the falling Indian Rupee against the U.S. dollar. The purchase of 145 Ultra Light Howitzers, 155mm/39 calibre M777 guns from BAE Systems was decided in 2010, after the tender was earlier cancelled, in which Singapore Technologies and BAE Systems were in competition, after the Singapore company was blacklisted in 2009. The cost of the 145 guns in 2010 was estimated to be around Rupees 29600 million. However, in the letter by Pentagon notifying the U.S. Department August 7 2013, the price of the guns is quoted for over $885 million (Rupee 58000 million), nearly double the estimated price in 2010. Sources in Ministry of Defence say delays in procurement have become very frequent as the Indian Defence Minister A K Antony insists on transparency and responds to even unanimous complaints. For the purchase of the Ultra Light Howitzer guns, the trial report was leaked last year which led to the setting up of an internal enquiry. Recently there have been unanimous complaints on the purchase of the guns and an enquiry has again been set up. On August 20, the India Defence Minister told Indian Parliament that there have been further complains received.
He said, “Representations from two Members of Parliament were received in 2010, followed by various anonymous complaints regarding alleged irregularities in the procurement of ultra light howitzers. The main issues raised in these complaints relate to technical parameters, cost effectiveness and economic viability of the gun.”
The Indian MoD has constituted a Technical Oversight Committee as per provisions of the DPP (Defence Procurement Procedure) that has also been tasked with examining all the complaints relating to this procurement case.
The Indian Prime Minister, Manmohan Singh visits the United States in September, it is hoped that the deal would be finalized by then. However MoD sources said, “In view of the enquiry and the insistence by Antony to ensure transparency, it is likely that the purchase programme may not be finalized even before the Indian Prime Minister Manmohan Singh’s visit to Washington.”
BATTLESPACE sources suggest that the increase will only occur from October, within FMS Rules, a small increase of 5-10% may be the outcome. If they haven’t ordered by then the cost goes up significantly. In addition the production line may close, although key components are being built in anticipation of order.