The fate of Future Infantry Combat Vehicle for Indian Army to be decided next week: Sources

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Published: January 3, 2019 8:38:48 PM

The fate of the $8-billion (approx Rs 60,000 crore ) Future Infantry Combat Vehicle (FICV) project for the Indian Army which was expected to be decided last month is now expected to be sealed when the Defence Secretary, Production, Ajay Kumar will meet with the stakeholders next week.

Initially, the FICV project was approved under the strategic partnership model for the armoured vehicle segment was considered under the ‘Make’ category under DPP-2008. (Reuters)

The fate of the $8-billion (approx Rs 60,000 crore ) Future Infantry Combat Vehicle (FICV) project for the Indian Army which was expected to be decided last month is now expected to be sealed when the Defence Secretary, Production, Ajay Kumar will meet with the stakeholders next week.

Highly placed sources have confirmed to the Financial Express Online that “The meeting scheduled for December 12, 2018 had to be postponed due to the non-availability of the officials. They are now expected to meet on January 9 to decide the fate and the future line of action for the project, which is expected to come under the ‘Make II’ category in an effort to involve the private sector in the defence sector to get more active in Make in India initiative.”

Sources also confirmed that there are differences of opinion between the Indian Army –the user and the Ministry of Defence (MoD) which has decided to put the critical programme under the Make-II category. “The main issue, where there is divergence of views, is that the MoD wants the Indian Army to pay for this project,” said a senior officer on condition of anonymity.

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Though the reason behind putting it under the Make II category was to fast track the process of modernising the Armoured Vehicles of the Indian Army, the chances now seem bleak this financial year, sources said.

If all is cleared during the meeting next week, then the Project FICV will go to the Defence Acquisition Council for approval.  To be ‘Made in India’ it will have minimum 40% indigenous content.

As has been reported by the Financial Express Online, three companies including Mahindra and Mahindra, Reliance Defence and Engineering and Titagarh Wagons have sent their proposals to the MoD.

The potential Original Equipment Manufacturers (OEM) includes US-based General Dynamic, Russian companies under the umbrella of Rosoboronexport, and German Rheinmetall – subject to approval – among others.

Initially, the FICV project was approved under the strategic partnership model for the armoured vehicle segment was considered under the ‘Make’ category under DPP-2008.

In 2018, The Financial Express Online was the first to break the news that the FICV project will be shifted to ‘Make II’ category, which was later confirmed by the Defence Secretary at the annual presser in 2018, that the project was, moved to that category in an effort to fast track it.

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Under the Make II category no funding is required from the MoD, unlike the ‘Make’ category, where the ministry has to provide 90% of funds up to the prototype stage.   As per the Chapter–III of DPP-2016, the ‘Make’ procedure for indigenous design, development and manufacture of defence equipment/ weapon systems was simplified in 2016.

Later a new sub-category — Make-II (industry funded) — was introduced with a major focus on development of equipment/system/platform or their upgrades or their subsystems/sub-assembly/assemblies/components. In this subcategory, no government funding is envisaged for prototype development purposes, but there is assurance of orders on successful development and trials of the prototype.

Under the initial proposal of `Make’ category, the plan was to have three development agencies (DAs) – two from the private sector and one from the Ordnance Factory Board,  and the MoD had to  give minimum of Rs 500 crore each to the three DAs as per the procedure.

In 2016, MoD had has asked the Indian Army to seek a detailed project report (DPR) from all the contenders who had received the expression of interest (EoI). About 2,600 FICVs — high-tech complex vehicle programme under the ‘Make’ category —as 2,600 FICVs with a lifespan of 32 years, are expected to replace the Army’s old Russian-origin BMP-2 infantry combat vehicles by 2025.

The project which has already been delayed by a decade, got delayed further as `The Integrated Project Management Team (IPMT)’ took more than a year  to seek detailed reports from all the companies as the MoD was unable to down select any of the companies who had responded to the revised EoI.

Explaining the process, a senior officer said that the Preliminary services qualitative requirements (PSQR) act as guidelines during preparation of DPR.

As has been reported by The Financial Express Online earlier, the MoD has been trying to announce the it’s final decision for some time now. However it could not happen due to various representations made by companies who have been keen on participating in the programme. Just when the government was about to make the final cut, senior leadership from various companies have been making individual representations to the MoD, thus causing delays.

A lot of issues – mostly procedural in nature were raised by the companies which delayed the project just when the former defence minister Manohar Parrikar was about to announce the winner.

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