Jaitley Clears Rs 34,260 Crore Military Deals at One Stroke

The DAC gives the go-ahead for purchase and tendering of militaryware for 3 forces

Published: 20th July 2014 06:00 AM  |   Last Updated: 20th July 2014 12:34 AM   |  A+A-

aircraft.PNGNEW DELHI: Two months after Narendra Modi took charge as Prime Minister, his pre-poll promise of quicker decisions on arms purchases was put into action, with Finance-cum-Defence Minister Arun Jaitley on Saturday chairing his first military acquisition meeting that cleared  procurement, cumulatively worth `34,260 crore, at one go.

And the Defence Acquisition Council (DAC) gave the go-ahead for purchase and tendering of military ware for all the three services, of which a majority were warships meant for the Navy and the Coast Guard, according to Ministry of Defence (MoD) sources.

The meeting, held in the middle of the Budget session, was attended by Minister of State for Defence Rao Inderjit Singh, Army Chief Bikram Singh, IAF Chief Arup Raha, Navy Chief Robin Dhowan, Defence Secretary R K Mathur and other Department Secretaries of the MoD. According to sources, the DAC cleared a  `15,000-crore tender for the purchase of 56 transport aircraft, to replace the obsolete Avro planes of the Air Force to be a ‘private sector only’ venture.

The Avro replacement tender was issued in May 2013, but was put on hold by the then Defence Minister A K Antony-led DAC in December, following protests from his ministerial colleagues for keeping the public sector Hindustan Aeronautics Limited (HAL) out of the bidding process. The argument against the ‘private sector only’ clause was that none of the Indian private sector firms involved in aerospace had adequate manufacturing facilities for an Avro-sized plane. The small requirement for such planes made the huge investments on building a production unit unviable, in terms of profitability.

Under the tender clause, an original equipment manufacturer of foreign origin should bid for the contract after tying up with an Indian Production Agency, which should be an Indian private sector company. The first 16 planes would be manufactured abroad by the winning foreign vendor, but it has to transfer technology to its Indian partner for manufacturing the remaining 40 planes. Jaitley-led DAC also decided to push through the Naval requirement for five fleet support ships at a cost of `9,000 crore, apart from patrol vessels and fast patrol vessels, numbering five each, for the Coast Guard, at a cost of `2,000 crore and `360 crore respectively, sources said. Apart from these, the Navy and the Coast Guard’s proposal to buy 32 Advanced Light Helicopters, Dhruv, from HAL, worth `7,000 crore, got the DAC nod.

The requirement for Army, Navy and IAF,  for search and rescue equipment worth `900 crore were also cleared. Jaitley had, in the general budget announced earlier this month, allocated `94,588 crore for defence capital expenditure.

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