Scrapping the tender, the Defence Acquisition Council chaired by Defence Minister Arun Jaitley put the acquisition under the Buy and Make Indian category, allowing the Indian industry to make the helicopters under a joint venture with a foreign manufacturer.
This is the second defence tender under the new government to be opened to the Indian industry. Last month, the government had opened the process to develop 56 transport aircraft to the domestic private sector.
The scrapping of the tender is significant as former defence minister A K Antony had deferred a decision on it following the VVIP helicopters scam. Investigations into the scam had also revealed alleged kickbacks in the light utility helicopters procurement process.
In January, the Central Bureau of Investigation had registered a case against a Brigadier working with Army Aviation Corps for allegedly fudging trial flight records of these helicopters.
While this decision is likely to spell bad news for two foreign vendors one European and one Russian who were in the race to equip the Indian forces with 197 light
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Govt scraps light utility helicopter tender, opens it to Indian players
utility helicopters to replace their aging Cheetah and Chetak helicopters, sources in the Defence Ministry said it is likely to bring in business worth Rs 40,000 crore for the Indian industry.
The DAC retracted the Request for Proposal for the procurement of 197 LUH and decided that it would be under Buy and Make Indian category. It confirms the policy of the Indian government to encourage Indian industry, an MoD official said.
While clearing proposals worth Rs 20,000 crore in one go, the Defence Acquisition Council also cleared decks for the procurement of 22 Chinook heavy lift helicopters and 15 Apache attack helicopters for the IAF by approving the offset proposals of the US manufacturer. Jaitley also cleared the proposals for Navy, which include equipping 11 of its ships four destroyers and seven frigates with anti-submarine warfare suit at Rs 1,770 crore and a mid-life upgrade for six of its submarines at Rs 4,800 crore.
It also accorded extension of the Acceptance of Necessity for the indigenous MBT Arjun Mk-II tank, clearing the Rs 6,600 crore purchase for the Army, a mobile cellular communication system for 3, 4 and 14 Corps at Rs 900 crore and 40 self-propelled guns on the MBT Arjun chassis provided all of them successfully completes the validation trials.