The issuance of Request for Proposal (RfP) for six advanced submarines for the Indian Navy under Project-75I which is under the Strategic Partnership (SP) route is expected to get delayed further.
Under the Project 75I, the submarines for the Indian Navy are going to be constructed in India and will be through ToT by the OEMs.
The issuance of Request for Proposal (RfP) for six advanced submarines for the Indian Navy under Project-75I which is under the Strategic Partnership (SP) route is expected to get delayed further. The RfP for these six submarines was expected to be issued in 2020; however it has got delayed due to several issues including legal concerns. Two RfPs are to be issued: The Ministry of Defence (MoD) is going to issue the two shortlisted Strategic Partners (SP) – Mumbai based Mazagon Dock Shipbuilders and Larsen & Toubro (L&T). And then, this will be followed by the issuance of RfPs to the OEMs by the SP.
“Legal ambiguity as well as technical issues is holding up the issuance of the RfP. These concerns are in the process of being addressed in the MoD. Once that procedure is completed the RfP will be sent out to four OEMs,” explained a source.
The proposed SP structure leads to contractual challenges. What are these?
1. If there are two SPs and four OEMs, then will the SPs have the right to eliminate two OEMs from the race? Thereby, limiting the chance for the Indian Navy.
2. Will the MoD allow SP to run the elimination process which can partially increase the cost of the project significantly.
3. An OEM who otherwise may have no chance to win the contract because of its expensive solution in a competitive environment can influence the SP to eliminate lower/lower cost OEM by giving a favourable business deal.
4. Finally, in a contract where the SP will have total dependency for TOT on OEM, in such a case who will be responsible to the MoD for the underperformance – SP or OEM?
These are few amongst many issues that are holding back the issuance of the RfP.
What is unique about Project-75(I)?
It is the most important naval programme which is in line with the government’s Strategic Partnership (SP) Model. It has broad-based competition and is a high-value project.
Under the Project 75I, the submarines for the Indian Navy are going to be constructed in India and will be through ToT by the OEMs. This project is under the SP model which has been adopted in an effort to ensure building capacity in Indian Industry. The idea is that this is going to help in the local manufacturing of major military platforms.
This project is part of the 30 year Plan for indigenous submarine construction. And it got its approval by the Cabinet Committee on Security in 1999. The idea behind this was help in streamlining the submarine acquisition process and creating two submarine production lines where the plan was to construct six submarines on each. This was to be done in collaboration with foreign OEMs.
In an effort to maintain a force level of at least 20 modern submarines in the Indian Navy.
Who are the SPs and OEMS?
There are two Strategic Partners – these have been down selected by the Ministry of Defence: M/s MDL and L&T. And there are four OEMs including: The Naval Group of France. This French company is already involved in the `Scorpene’ submarine under Project-75.
There is Navantia of Spain which has offered S-80 (Issac Peral class); TKMS of Germany — Type 218 (Invincible Class) and Rosboronexport of Russia for the Amur.
Besides these four, South Korean company Daewoo Shipbuilding & Marine Engineering had pitched the KSS-3 submarine in response to the EoI earlier.