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  1. India likely to seek more time, freeze on price to buy howitzers

India likely to seek more time, freeze on price to buy howitzers

Despite giving approval to import $750-million 145 BAE Systems’ M777A2 155mm/39 calibre lightweight howitzers from the US through the Foreign Military Sales (FMS) route, India has sought freeze on the price for three more months.

By: | New Delhi | Published: August 24, 2016 6:00 AM

Despite giving approval to import $750-million 145 BAE Systems’ M777A2 155mm/39 calibre lightweight howitzers from the US through the Foreign Military Sales (FMS) route, India has sought freeze on the price for three more months.

Highly-placed sources told FE that “the deadline for signing the deal is September 10, but the ministry of defence (MoD) is planning to seek three-month extension and a freezing of the price of 145 M777A2 LW155 howitzers for the Indian Army”.

The initial price notified by the US in 2012 was $694 million and the company has been seeking a 10% hike on the four-year-old price. The negotiation price for the 145 M777 howitzers is $750 million, which India wants to take for its mountain strike corps for offensive operations.

The Indian Army plans to use these howitzers in defensive troop deployment spread across the country’s vast rugged terrain. The gun will come with laser inertial artillery pointing systems (LINAPS), maintenance, personnel training and training equipment, technical assistance, engineering and logistics support services.

Demonstrating its commitment to Prime Minister Narendra Modi’s call to ‘Make in India’, BAE Systems earlier this year had officially announced selection of Mahindra Defence & Aerospace, Mahindra Group, as its business partner for the proposed in-country assembly, integration & testing (AIT) facility for the M777 ultra lightweight howitzer.

The Defence Acquisition Council (DAC), headed by defence minister Manohar Parrikar, in June had agreed that 25 of the long-awaited M777s for deployment along the China border would be procured in completed form. While the company will locally discharge 30% of the overall contract value in offsets – which had been separately negotiated – the rest of the 120 guns, according to sources, is expected to be built at BAE Systems AIT facility, which is to be set up here in partnership with Mahindra Group.

As reported earlier by FE, the technological challenge involves the use of titanium. The FMS proposal does not envisage a joint venture. Significantly, the gun barrel of the American gun cannot be made in India. This is barred by the Berry Amendment, a Congressional Act in the US.

BAE Systems said howitzer deliveries would begin within six months of the contract being signed – likely before the offer expires in August – and be completed within 54 months in accordance with the US government’s Letter of Acceptance for the guns to the MoD in early June.

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