In an effort to attract Rs 35,000 crore investments in next five years in the defence sector, the government is working on a more liberal Foreign Direct Investment (FDI) policy. Such a move is expected to allow 100 % FDI under automatic route for Tanks, Armoured Vehicles and Military Transport Aircrafts production in India.
Russian companies are eyeing tenders for Purchase, upgradation of T-90 Tanks. The contracts are mostly for the development and manufacturing of arms and equipment including short range unmanned aerial vehicles, advanced robotic surveillance systems, 1200-1500 HP modular engine for tank T-90 S/SK, and third generation missile for 125mm gun barrels of T-90 And T-72 Tanks. The biggest of the contracts is the manufacturing of modular engine for T-90 tanks pegged at $1.5 billion.
Unfortunately, due to lack of domestic orders, India’s private sector defence companies were not making much profit. Since the state owned ordnance factories were able to achieve only 80 percent target for over 51 percent of the total projects in the last four years, the government decided to open up the sector to private players.
The Ministry of Defence has recently floated tenders for the supply of 125mm armour piercing guns for T-90 & T-72 tanks, 40mm multiple grenade launcher/under barrel grenade launcher, 30mm ammunition used by armoured infantry carrying vehicle, 122mm grad rockets for Pinaka series for approx $ 350 million and bi-modular charge system.
The tender requires Indian private companies to forge a joint venture with foreign firms for the purpose of manufacturing specific products with complete transfer of technology. The foreign firm, however, would not hold a major stake in such joint venture.
The Indian Army wants to purchase the robotic surveillance platform for the Rashtriya Rifles battalions which primarily tracks terrorist hide-outs in urban or built up areas, however there is no fixed time line for this.
It maybe early this year, the defense ministry had indicated that arms and ammunitions worth $3 billion would be purchased from domestic manufacturers over the next decade.