Tender-riven UPA stalls Rs 12,000 crore aviation bid - The New Indian Express

Tender-riven UPA stalls Rs 12,000 crore aviation bid

Published: 17th Nov 2013 06:53:49 AM

The public sector is fighting back with the full power of political artillery. Lying on the tarmac is a tender worth Rs 12,000 crore the Defence Ministry floated in May for private sector companies to build 56 military transport planes. These are replacements for 60 ageing Avros in service.  Political and industry pressure from within UPA and the public sector pushed the Defence Acquisition Council led by Minsiter A K Antony to decide on a review of the tender earlier this week, and push back its response deadline to March 2014. The move follows letters written by NCP leader and Heavy Industries and Public Enterprises Minister Praful Patel and Congress MP Jagadambika Pal to the Defence Ministry to make the tender open to state-owned industries too.

According to the tender, India would award the project to a foreign firm, but only the first 16 of the 56 planes would be supplied by the Original Equipment Manufacturer (OEM) from abroad. The rest 40 aircraft would be manufactured in India with the OEM hiring an Indian private sector firm to transfer technology so that the plane could be manufactured by the domestic industry in future. “This may also involve a programme risk since the private sector has to set up these facilities ab-initio besides creating new skill set in high technology area. This will lead to the poaching of precious expertise from the public sector,” Pal said, pointing out that HAL’s Kanpur facilities were good enough to take on the task of building the Avro replacements.

Joining the protest battalion are government agencies protecting public sector interests, such as National Manufacturing Competitiveness Council (NMCC), a government body for policy dialogue to energise and sustain growth in the manufacturing sector, and Standing Conference of Public Enterprises (SCOPE), an apex body of public enterprises, who have taken up the cudgels on behalf of Hindustan Aeronautics Limited (HAL) and Bharat Earth Movers Limited (BEML).

In his July 19 letter to Defence Minister A K Antony, NMCC chairman Dr V Krishnamurthy became the first to voice objection on behalf of the public sector, noting that there was “no merit” in excluding them from the bidding process.

Also read: Lack of past success no deterrent for PSU lobby

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