Indian defence may hit dead-end for $885 million howitzer deal with US

Discussion in 'Indian Army' started by AVERAGE INDIAN, Jun 24, 2014.

  1. AVERAGE INDIAN

    AVERAGE INDIAN EXORCIST Senior Member

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    NEW DELHI: The long-pending $885 million deal with the US government for 145 ultra-light howitzers is headed for a dead-end, with the Indian defence establishment feeling the artillery guns are way too expensive to buy for the new Army divisions being raised for the border with China.

    Defence ministry sources on Monday said though no final decision has been taken as yet, there was "no way" the American M-777 ultra-light howitzers could be bought for over Rs 30 crore apiece.

    Moreover, artillery manufacturer BAE Systems has "failed to come with a viable and compliant offsets package'' in what is supposed to be a government-to-government deal under the US foreign military sales (FMS) programme.

    "Alternatives to the M-777 guns can be found for half the cost. Though in a different class, the indigenous Dhanush howitzer for instance is being manufactured at a cost of Rs 14 crore per gun," said a source.


    Like many other big-ticket defence projects, even the proposed M-777 deal has witnessed its own share of controversies, with huge cost escalations, "leaking" of classified field evaluation reports and allegations of irregularities against a top military officer.

    The Army has been demanding 155mm/39-calibre light-weight howitzers, with a strike range over 25-km range, for around a decade now. Guns like the M-777, partly made of titanium, can be swiftly air-lifted to "threatened high-altitude areas" along the 4,057-km Line of Actual Control (LAC).

    China, of course, has built massive infrastructure along the LAC, which allows it to swiftly mobilize troops and equipment to outnumber Indian forces by 3:1 there. The howitzer project, among others, is meant to equip the new XVII Mountain Strike Corps (90,000 troops) being raised to gain "quick reaction force capabilities" against China.

    "Our border infrastructure is also coming up, albeit slowly. There are more options to take heavier artillery guns to forward areas now," said the source.

    The Defence Acquisitions Council (DAC), led by the defence minister, had in June 2006 formally given the go-ahead for acquiring 145 ultra-light howitzers from abroad. But the frontrunner, the Pegasus gun of Singapore Technology Kinetic's, was ejected after the firm was blacklisted in the corruption scandal against former Ordnance Factory Board chairman Sudipto Ghosh.

    India then went in for the M-777 howitzers under the FMS programme, which does not involve an open competition. The US Defence Security Cooperation Agency in January 2010 notified its Congress of the Obama administration's intention to sell the 145 M-777 guns to India for $647 million ( Rs 3,882 crore). The US offer was renewed in August 2013 with the new project cost being pegged at $885 million (Rs 5,310 crore).

    Critical Projects:

    * Almost $20 billion MMRCA (medium multi-role combat aircraft) project to acquire 126 fighters. French Rafale jet won selection process, which began in August 2007, but project yet to be inked. IAF down to just 34 fighter squadrons.

    * Over Rs 50,000-crore acquisition of six new-generation stealth submarines, with both land-attack missile capabilities and air-independent propulsion (AIP). Project-75India approved in November 2007 but global tender yet to be issued. Navy down to just nine operational diesel-electric submarines at present, with another four stuck in long refits.

    * Over Rs 3,000-crore acquisition of 197 new light-utility helicopters for IAF and Army. Project already scrapped once in December 2007. 440 such helicopters needed to replace virtually obsolete Cheetah/Chetak fleets.

    * Over Rs 30,000 crore artillery modernization plan for 145 ultra-light howitzers, 1,580 towed guns, 814 mounted guns, 100 tracked self-propelled guns, 180 wheeled self-propelled guns etc. India has not inducted a single 155mm artillery gun since the Bofors scandal of the mid-1980s.

    Read more at:
    Indian defence may hit dead-end for $885 million howitzer deal with US - The Economic Times
     
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  3. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

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    Re: Indian defence may hit dead-end for $885 million howitzer deal wit

    So what's on the table now - - any flexibility in negotiations?

    The other consideration must be how important is "ultralight" in that theater of operations - - would the reduced costs of logistics perhaps make the gun's price worth it?
     
  4. AVERAGE INDIAN

    AVERAGE INDIAN EXORCIST Senior Member

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    Re: Indian defence may hit dead-end for $885 million howitzer deal wit

    The failure to consider the order by the DAC has wider implications as it is unlikely that any decision can be taken on this order and the value of the deal has increased 37 percent hike.to USD 885 million, as reported by most of the media sources. In today’s terms this amounts to a difference of about INR 1,200 crore.

    Not only does this mean that India will have to pay extra for this cost escalation for the artillery guns, it also makes the question of procurement of the howitzers, itself, uncertain. This is because the existing assembly lines of the BAE Systems M-777 howitzer have shut down in the September-October period last year in the absence of any firm orders and the cost of restarting those lines would also have to be borne by India, if the ministry decides to clear the purchase later. as reported by the above article
     
  5. sasi

    sasi Senior Member Senior Member

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    Re: Indian defence may hit dead-end for $885 million howitzer deal wit

    /"Our border infrastructure is also coming up, albeit slowly. There are more options to take heavier artillery guns to forward areas now," said the source./
    ~
    if this's taken care,then no need for any light gun!
    ~
    145 m777 cost $1bn!
     
  6. jmj_overlord

    jmj_overlord Regular Member

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    Re: Indian defence may hit dead-end for $885 million howitzer deal wit

    so if india goes ahead with the deal, then all the costs associated with the production and maintenance have also to be borne by india ?
     
  7. AVERAGE INDIAN

    AVERAGE INDIAN EXORCIST Senior Member

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    Re: Indian defence may hit dead-end for $885 million howitzer deal wit

    The failure to consider the order by the DAC has wider implications as it is unlikely that any decision can be taken on this order and the value of the deal has increased 37 percent hike.to USD 885 million, as reported by most of the media sources. In today’s terms this amounts to a difference of about INR 1,200 crore.

    Not only does this mean that India will have to pay extra for this cost escalation for the artillery guns, it also makes the question of procurement of the howitzers, itself, uncertain. This is because the existing assembly lines of the BAE Systems M-777 howitzer have shut down in the September-October period last year in the absence of any firm orders and the cost of restarting those lines would also have to be borne by India, if the ministry decides to clear the purchase later. as reported by the above article
     
    jmj_overlord likes this.

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