Nirmala puts shoulder to combat vehicle project

In less than a month as Defence Minister, Nirmala Sitharaman has decided to firm up a $12-billion project to procure over 2,300 Futuristic Infantry Combat Vehicles (FICV) for the Indian Army.

Besides the Ordnance Factory Board (OFB), which has been nominated for the project, five private companies are fighting for the deal: L&T, Tata Motors, Reliance, Mahindra, and Tata Power SED-Titagarh Wagons. All these firms had responded to the expression of interest (EoI) in 2015.

As per the EoI issued in 2013, some of the critical technologies have to be acquired globally. Some of the global original equipment manufacturers eyeing the deal are General Dynamics, Lockheed Martin, BAE Systems and Rheinmetall.

It is learnt that the Minister has sought details of the project, one of the major armament programmes of the Indian Army. An informal meeting was held on Tuesday, and the Defence Procurement Board (DPB) is likely to take up the matter on September 26, sources told BusinessLine.

The Minister may also raise the matter with US Secretary of Defence James Mattis, who is coming on a two-day visit to India later this month. The Russians, too, are said to be pushing for the deal through the OFB.

The Defence Ministry is believed to be weighing a number of options to push the deal through. One of the options is to bring the project under the Strategic Partnership Policy (SPP), which many within the industry believe to be “an easier and cleaner way” to firm up the deal, said an official who sought anonymity.

Under the SPP, there are four segments — fighter aircraft, helicopters, submarines, and armoured fighting vehicles (AFV) and main battle tanks. The idea is to bring the FICV project under the AFV segment.

“If the FICV is brought under the SPP, surely the big guys will get it. A small company cannot execute an order of this scale. Whoever wins the deal will have to have a proven track record and healthy financials,” said an industry expert who declined to be identified.

One of the key reasons why the project had been facing inordinate delays is the lack of adequate design. Since this is a brand-new platform, it will take a couple of years just to come up with a a detailed project report, following which a prototype has to be developed. All these will require initial investments worth about $25 million, according to industry sources.

“Even if the project were to start today, it will take several years to be finished. The first platform will only be ready in 10 years. This is a new design for everyone,” said an industry player eyeing the deal.

The FICV project has been pending for over a decade now for various reasons, including bureaucratic procedures, corporate infighting and failure to appoint a credible developmental agency.