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The defence ministry on Friday scrapped a scam-tainted tender worth over Rs 6,000 crore to procure 197 light helicopters from foreign vendors and decided to allow indigenous players to manufacture these choppers for the armed forces.
In a meeting of the Defence Acquisition Council headed by Defence Minister Arun Jaitley, the government cleared proposals worth over Rs 17,500 crore and gave a go-ahead for opening the commercial bids for Navy's tender for 16 multirole helicopter involving AgustaWestland.
The ministry cleared the final hurdles for the Rs 15,000 crore deals for procuring 22 Apache attack choppers and 15 Chinook heavylift helicopters to be procured from the United States, a few weeks ahead of Prime Minister Narendra Modi's visit to that country.
The DAC decided to retract from the tender for procuring 197 helicopters and it has been decided that the Indian industry would be given the opportunity to produce around 400 such choppers for the requirements of the armed forces, defence ministry sources said.
In line with prime minister's call for promoting domestic manufacturing industry, the government's decision to buy the choppers under the 'buy and make' category is expected to generate business worth over Rs 40,000 crore for the local industry in the defence sector, they said.
Out of the 197 choppers, 133 were meant for the army while the remaining were to be provided to the Indian Air Force for mainly supplying troops and equipment to high altitude locations such as the Siachen glacier.
This is the second time in seven years that the tender has been scrapped in which European Eurocopter and Russian Kamov were competing and it had been on hold for the past over two years due to an ongoing Central Bureau of Investigation probe and other allegations of wrongdoings in the trial process.
The CBI probe was ordered into the deal in view of allegations in the AgustaWestland chopper scam that a Brigadier had asked for a bribe of Rs 30 crore from the Anglo-Italian firm for helping it in the light chopper deal.
AgustaWestland was eliminated in the first round of the deal and only Eurocopter and Kamov were left in the race.
Commenting on the development, HAL Chairman R K Tyagi said, "This will give boost to indigenisation, and HAL and other organisations have the confidence to take on the challenge."
The state-owned HAL has acquired land in Tumkur in Karnataka for manufacturing the indigenous Light Utility Helicopter. The meeting deferred a decision on procurement of Spike anti-tank guided missiles from Israel against the backdrop of a proposal made by the US for joint production of Javelin missiles.
The meeting cleared the Rs 4,800 crore mid-life upgrade of Navy's six submarines which will include four Russian-origin Kilo class vessels and two German-origin HDW vessels, ministry sources said.
In the aftermath of the INS Sindhurakshak sinking in August last year, the Navy is working on upgrading the existing fleet of vessels. The meeting also sanctioned Rs 6,600 crore for the Army to procure 118 indigenously-built Arjun MkII tanks from the DRDO and 40 catapult artillery howitzers using Arjun tank chassis and the Russian-origin M46 barrels which would be manufactured by the Ordnance Factory Board at the cost of Rs 820 crore.
The meeting gave its nod for setting up dedicated mobile communication networks for Army troops deployed along the China border under Tezpur-based 4 Corps, Dimapur-based 3 Corps and Leh-based 14 Corps.
The meeting gave a go ahead to the navy to open bids of the tender for procuring 16 multi-role helicopters in a deal in which American Sikorsky and European NH Industries, which includes AgustaWestland, are in contention.
The decision to give the go ahead for opening the bids of the two competitors in the race was taken after the defence ministry issued guidelines for dealing with cases involving Italian Finmeccannica defence group and its subsidiary companies.
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The defence ministry cleared proposal for offsets deviations in the Rs 15,000 crore deal for buying 15 Chinook and 22 Apache attack helicopters from the US. It also cleared a Rs 1,700 crore proposal for anti-submarine warfare suite and sonar for navy's warships built under Project-7A and Project-15B warships indigenously.
It approved a proposal for buying anti-collision systems for Ilyushin-38 Sea Dragon and Tu-142 anti-submarine warfare and maritime surveillance aircraft of the navy.