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The Defence Ministry finally gave a go-ahead to purchase 145 pieces of ultra-light howitzer battlefield guns for $750 million from US. This is the first such procurement of field guns by the Indian Army since the Bofors deal.
The deal, which had been pending for over a decade, was finalised by the Defence Acquisition Council (DAC) chaired by Defence Minister Manohar Parrikar here on Saturday.
The M777 155mm/45-calibre towed guns manufactured by the BAE Systems would be required through the Foreign Military Sales (FMS) route, according to a top Defence Ministry official.
Under this FMS, the US government seals the letter of acceptance (LoA) for submission to the Indian authorities and thereafter the deal is inked.
Price escalation
The new LoA included a revised price of $750 million, an escalation of six to eight per cent from the older price of $694 million, which was finalised in October 2013 under the previous UPA regime. At that time talks did not progress further until the present government cleared it in May, officials told BusinessLine.
The guns will be procured under this deal with the commitment of assembly, integration and testing here in India under the offset policy. Therefore, the government will be purchasing only 25 guns while the remaining 120 will be manufactured in collaboration with Mahindra.
The 145 gun-pack delivery will be done by the Ordnance Factory Board (OFB) in order to save the cost of transportation, said another official of the Defence Ministry.
These guns will be installed in Arunachal Pradesh and Ladakh region.
Dhanush
The DAC also reviewed the progress made in the production of home-grown field gun – Dhanush – made by the OFB, Kolkata. This is also a 155mm/45-calibre gun with a range of 38 kilometres. This is being produced as part of transfer of technology under the Bofors deal signed in 1986 for $1.4 billion.
"While three guns would be delivered for user exploitation by June 30, three more will be handed over by September end. DAC also cleared bulk production of 18 guns to enable better exploitation and setting up of indigenous production," said the official.
The Dhanush was first tested in December 2011. However, the DAC has now ordered its trial by the Army with June and thereafter in September.
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