Tatas, M&M may participate in Rs 12,700-crore Army fleet upgrade project

NEW DELHI: The Army is all set to reverse its decision to hand over a mega Rs 12,700-crore upgrade of its fleet of infantry combat vehicles to the public sector. The deal will now be opened up for the private sector as well, allowing top players like Tata and Mahindra to participate in the bid.

Sources familiar with developments have told ET that the new plan entails splitting the contract to modernise over 1,600 in-service BMP2 armoured vehicles in two rounds. In the first phase, 640 of the Soviet origin infantry combat vehicles will be straight away put up for the private sector to bid on a competitive basis. Based on this, a final call will be taken on the remaining vehicles. The Ordnance Factory Board (OFB) is, however, lobbying hard to retain part of the balance contract.

Follow @ETDefence Twitter handle for comprehensive coverage on other buzzing Defence stories

ET has learnt that the army has already moved a formal note in December second week, reversing its earlier decision to upgrade all of the armoured vehicles through OFB. The decision presents a big opportunity to the private sector to acquire basic technology and knowhow on design,which, in turn, could help companies to aspire greater involvement in more challenging projects like the Futuristic Infantry Combat Vehicle (FICV).

The army had earlier proposed that the comprehensive upgradation of its BMP 2 armoured vehicles — to be modernised with new fire control systems, Kornet E anti-tank missiles and third generation night vision capability — be handed over the Medhak Ordnance Factory. As reported by ET in September, the private industry was up in arms against the move as it had its eyes set on the contract that was being seen as a key enabler.

It’s believed that several companies also protested to the defence ministry against the move to hand over the project on non-competitive basis. The BMP 2 ‘ Sarath’ infantry combat vehicles are the mainstay of the mechanised infantry and have been in service since 1987. They are employed in various roles — from an armoured ambulance to an amphibious dozer, besides offensive combat missions.