Keeping in tune with Prime Minister Narendra Modi’s “Make in India” campaign, US arms major BAE Systems has proposed to set up an artillery gun manufacturing unit in India for supplying 145 M777 ultra light weight howitzers to the Indian Army.
Once Indian demands are met, the same manufacturing and testing facility could be used by the foreign firm to feed its existing global customers, including the US, Canada and Australia, as well as prospective ones from South American, Middle Eastern and European armed forces.
“We have already signed a MoU with around 40 Indian companies after assessing their capabilities to support our offset offer and perform assembly, integration and test of the M777. Nearly half of these are micro, small and medium enterprises,” John Kelly, vice-president, business development and strategic planning, BAE Systems, told Deccan Herald.
Defence Minister Manohar Parrikar had earlier stated that the central government would look at manufacturing proposals from foreign vendors if the equipment makers involved a large number of Indian small and medium-sized business units. The arms export norms are also being revised.
The ultra light howitzer deal was under the works for several years after successful trials of these guns in the mountains. The Army was planning to utilise the M777 guns for high-altitude warfare in the North-East as well as in Jammu and Kashmir. Compared to the weight of other artillery guns, it is lighter.
Its costing, however, was the bone of contention. In March, 2013, the US government gave an offer and acceptance letter for the same deal at $694 million as the deal was to be done through the foreign military sales route. There was also a proposal on 30 per cent offset for the deal. The US firm, sources said, was now ready to offer the M777 guns at a price, which is 6-8 per cent of the cost it quoted in 2013.
The 2013 proposal did not materialise because the deal expired for want of a response from the Defence Ministry in time. It happened because the US Congress approval had an expiry date. The US government had subsequently taken an approval from the Congress to offer the M-777 deal to India at a ceiling price of $885 million, an increase of 27 per cent.
“The case for procurement of ULH guns through US government has not progressed due to cost issues and because the vendor has not been able to come up with a proposal fully compliant with the offset requirements,” former defence minister Arun Jaitley informed the Lok Sabha in July.