Make in India: Defence ministry okays $3.4 billion deals including procurement of US-origin M777 artillery guns

NEW DELHI: In what will be a major fillip to the private defence manufacturing sector, the government has cleared three ‘ Make in India’ contracts worth $3.4 billion, including a project to procure US-origin M777 artillery guns. ET was the first to report on May 8 that the ultra-light howitzers could be partly made locally with BAE proposing to shift its production unit here in partnership with a private firm.

In the race for this $700-million deal are Mahindra, L&T and Tata, who can get a share in the ammunition, spares and maintenance of the guns.



The deal will be signed on a foreign military sales or government-togovernment pact with the US.

Another major contract cleared by the Manohar Parrikar-led defence ministry has the potential of turning Tata into an Indian aviation giant. A partnership venture of Airbus and Tata have been cleared to produce a new series of transport planes for the Indian Air Force. This deal, which mandates setting up of a production line in India, is worth $2 billion. While the initial order is for 56 aircraft, as first reported by ET it is likely to expand to at least 64 on the strength of a coast guard requirement.

The Modi government has also handed a gift to Russia with the defence ministry nominating Kamov to manufacture 200 light choppers in India to meet a long-standing requirement of the Indian Army. The Russian company will now make the Ka 226 choppers in India to replace the ageing Cheetah helicopters that are deployed on the Siachen glacier, among other areas. Kamov has already set up a company in Bangalore that will manufacture the choppers locally. It is still not known what will be the fate of a separate proposal for light choppers that were to be manufactured by an Indian companyled consortium.

The three deals have the potential of vitalising the defence manufacturing sector with a major chunk of the work going to private industry. On the howitzers deal, as per the initial contract, 145 guns will be procured but a significant order is likely to be placed in the future.

As reported, BAE has proposed to shift its assembly integration and testing AIT facility in India. This could in effect make India the global hub for the M777 howitzer with BAE planning to export the guns to customers in South America, Africa and Europe. BAE spokesperson told ET that AIT is an integral part of its proposal and the company will now proceed with choosing its local partners. Another project cleared is a Rs 2,700-contract to supply six new Brahmos systems to the Indian Navy.