Praful Patel questions barring PSUs from mega IAF tender

Upset over IAF's decision to bar PSUs like HAL from participating in a mega tender, Union Heavy Industries Minister Praful Patel has questioned why state-run units were being kept out and demanded they be given an equal opportunity.

Patel shot off letters to Prime Minister Manmohan Singh and Defence Minister A K Antony, saying many PSUs who meet all prescribed criterion for participating in the tender for supply of 56 transport aircraft to the Indian.

Air Force are being denied the opportunity to participate only because they are PSUs. The deal is estimated to be worth Rs 12,000 crore (Rs 120 billion).

"This being a government/public procurement, an equal opportunity and level-playing field is required to be provided to all capable entities irrespective of being 'Public' or  'Private' in nature. This will also encourage healthy competition," said Patel, whose NCP is a key UPA ally, in his communication.

Antony asked his ministry officials to examine the issues raised by Patel.

"The Defence Ministry is in receipt of a letter dated 07 October 2013 from the Minister of Heavy Industries and Public Enterprises addressed to the Defence Minister on the matter of procuring 56 aircraft as replacement of the existing AVRO fleet.

"Antony

has asked the Defence Ministry officials to examine the issues raised by Patel," the Defence Ministry said in a statement.

Antony as a head of the Defence Acquisition Council (DAC) had approved the IAF proposal for procuring these aircraft sidelining the PSUs.

Patel, who also holds the Public Enterprises portfolio, further said: "There are many PSUs who meet all the prescribed criterion for participating in this tender, but are being denied the opportunity to participate in this tender only because they are PSUs".

The IAF has to acquire 56 transport aircraft to replace its aging Avro fleet. In the tender, issued on May 9 this year, the defence ministry had by-passed PSUs like Hindustan Aeronautics Ltd (HAL) and said new aircraft will be produced by the Indian private sector firms.

Patel said in the letter that the extensive facilities, infrastructure and capabilities of these PSUs have been created over a period of time through government investments.

These PSUs have also gained invaluable experience as well as expertise in this area, he added.

Eight foreign vendors including American Lockheed Martin, Swedish Saab, Russian Rosoboronexport, Spanish Airbus Military, Italian Alenia and Brazilian Embraer have bid for the contract and they will have to find an Indian partner to produce 40 aircraft within India.