BAE Systems looks to revive contract for supply of 145 guns to India

[hkdas]

NEW DELHI: BAE Systems, which makes M-777 ultra-light howitzer (ULH) guns, is looking to revive a contract for the supply of 145 guns to India by pledging to comply with offset requirements in a letter to the ministry of defence.

The company is also open to reviving its partnership with Mahindra & Mahindra and is discussing possible joint ventures with two public sector companies, following the announcement that India will allow up to 49% overseas investment in the sector.

"We have conveyed to the defence ministry that our company is fully compliant with the offset rules and have written a letter confirming that we would comply with the direct offset rules," Ian King, chief executive officer of BAE Systems, told ET. Offsets pertain to local investment commitments by overseas companies as part of purchase contracts.

The letter was required after defence minister Arun Jaitley informed Parliament that the contract was stuck. "The deal has not progressed duecost issues and because the vendor has not been able to come up with a proposal fully compliant to the offset requirement," Jaitley said. The Indian government ordered 145 M-777s in 2013 at a cost of aboutRs 3,500 crore but that could increase to as much as Rs 5,000 crore due to various reasons, including reopening of the assembly line. However, King clarified that the cost as cited by the US government last year was the upper end of the price band. "It is a ceiling price, which is subject to ne otiations, and the price of the guns will be lesser than this," he said.

The order was a government-togovernment contract between the US and India. BAE was the only shortlisted bidder left after Singapore Kinetics was blacklisted for 10 years by the government over bribery allegations that the company has denied. The US government had issued a Letter of Acceptance, which lapsed on October 15, 2013, and BAE is hopeful that this will be discussed during US defence secretary Chuck Hagel's three-day visit to India starting Thursday.

These guns are expected to dramatically boost the firepower of the army since they can be moved easily and are ideal for mountain warfare. King welcomed the move by the government to raise the foreign direct investment (FDI) limit in defence and said that it gives the company enough opportunity to get into more than one programmespecific joint venture. "I am happy with 49% and we will be looking at joint ventures with all industrial companies.

We are in advanced stage of discussions with two public sector companies for joint ventures on communications and guns," said King, adding it was also open to reviving partnership with M&M.



BAE Systems looks to revive contract for supply of 145 guns to India - The Economic Times

 

[Sergi]

Wait !!! Is company approaching Indian Govt on its behalf ???
Not govt to govt contract ???

 

[Abingdonboy]

NEW DELHI: BAE Systems, which makes M-777 ultra-light howitzer (ULH) guns, is looking to revive a contract for the supply of 145 guns to India by pledging to comply with offset requirements in a letter to the ministry of defence.

The company is also open to reviving its partnership with Mahindra & Mahindra and is discussing possible joint ventures with two public sector companies, following the announcement that India will allow up to 49% overseas investment in the sector.

"We have conveyed to the defence ministry that our company is fully compliant with the offset rules and have written a letter confirming that we would comply with the direct offset rules," Ian King, chief executive officer of BAE Systems, told ET. Offsets pertain to local investment commitments by overseas companies as part of purchase contracts.

The letter was required after defence minister Arun Jaitley informed Parliament that the contract was stuck. "The deal has not progressed duecost issues and because the vendor has not been able to come up with a proposal fully compliant to the offset requirement," Jaitley said. The Indian government ordered 145 M-777s in 2013 at a cost of aboutRs 3,500 crore but that could increase to as much as Rs 5,000 crore due to various reasons, including reopening of the assembly line. However, King clarified that the cost as cited by the US government last year was the upper end of the price band. "It is a ceiling price, which is subject to ne otiations, and the price of the guns will be lesser than this," he said.

The order was a government-togovernment contract between the US and India. BAE was the only shortlisted bidder left after Singapore Kinetics was blacklisted for 10 years by the government over bribery allegations that the company has denied. The US government had issued a Letter of Acceptance, which lapsed on October 15, 2013, and BAE is hopeful that this will be discussed during US defence secretary Chuck Hagel's three-day visit to India starting Thursday.

These guns are expected to dramatically boost the firepower of the army since they can be moved easily and are ideal for mountain warfare. King welcomed the move by the government to raise the foreign direct investment (FDI) limit in defence and said that it gives the company enough opportunity to get into more than one programmespecific joint venture. "I am happy with 49% and we will be looking at joint ventures with all industrial companies.

We are in advanced stage of discussions with two public sector companies for joint ventures on communications and guns," said King, adding it was also open to reviving partnership with M&M.



BAE Systems looks to revive contract for supply of 145 guns to India - The Economic Times

Hmm, they are pretty desperate and the recent news has been pretty effective in getting BAE to concede on a number of issues.

I had doubted all the reports about the M777 deal being dead, IMHO it will eventually get ordered and sooner rathe than later.

 

[Echo_419]

Hmm, they are pretty desperate and the recent news has been pretty effective in getting BAE to concede on a number of issues.

I had doubted all the reports about the M777 deal being dead, IMHO it will eventually get ordered and sooner rathe than later.

Can't we increase the order to bring the costs down,we can get Industrial Benefits too if we can get them to produce here

 

[Sam Manekshaw]

obvious...Said it before

 

[Archie]

yeah but how many M777 will we eventually require
i think we just need 145 guns for the Mountain Strike corps and atmost another 200 for kashmir
we can probably order another 100 to keep the Lungis in check

 

[Nitin Saini]

U r talking sense, so we will ignore u.


Serious note: AM always in favor of any deal where some part of production is shifted to india as it creates self reliance and bring jobs.
Only by this we can learn and produce world class products and reduce dependence on military and high tech equipments.

 

[Bang Galore]

Hmm, they are pretty desperate and the recent news has been pretty effective in getting BAE to concede on a number of issues.

I had doubted all the reports about the M777 deal being dead, IMHO it will eventually get ordered and sooner rathe than later.

They should allow Singapore Kinetics in too. We just can't throw away a lot of money without getting the most benefit for what we spend. Foolish to continue the ban. Put a monetary punishment & move on.

 

[Badbadman]

we can probably order another 100 to keep the Lungis in check

That was golden "keep lungis in check". I think it would be overkill man

 

[Abingdonboy]

They should allow Singapore Kinetics in too. We just can't throw away a lot of money without getting the most benefit for what we spend. Foolish to continue the ban. Put a monetary punishment & move on.

Agreed, in the long run it is the Indian military that is hurt by this nonsense policy of blacklisting at the drop of a hat. blacklisting should be reserved for the most extreme cases where it is proven a company (on a strategic level) has followed policies to intentionally undermine Indian procurement interests on a consistent basis- NOT for the odd rogue mid/low level company executive who has got out of control and certainly NEVER for mere accusations alone.


The most sickening (yes sickening) example of this latest despicable practice is in the case of the Finmeccanica case involving the AW-101 procurement. The Italian courts have quashed the entire case against corruption involving the top levels of the company (including the AW-101 alleged bribery) and yet it has recently been announced the MoD is stalling all further deals with Finmeccanica and her subsidiaries (which are extensive) jeprodising countless Indian defence deals both close to completion, signed for or on the anvil across the board- Helos, torpedoes, small arms, towed sonar arrays, arty etc etc. The fact is to date a money trail has not been established and it is near impossible to see on whose part the wrongdoing was (according to the Italian courts it was no one) and yet this decision was taken along with the (retarded) move to scrap all 3 already- in- IAF- hands AW-101s despite these being the best head of state helos available on the market. Now the IAF is having to make do with antiquated Mi-8s and take frontline V5s out of their operational fleet and convert them into VVIP transport helos which they are in no way certified nor adequate to do. What a complete and utter clusterf*ck.

I really hope the new GoI/MoD will take more pragmatic decisions but I just don't know.......

Can't we increase the order to bring the costs down,we can get Industrial Benefits too if we can get them to produce here

Of course this is all possible,with a large enough order local production is on the table and economies of scale would dictate a reduction in prices- would just need the MoD to be pragmatic and look beyond their noses for one second.

 

[Bang Galore]

The most sickening (yes sickening) example of this latest despicable practice is in the case of the Finmeccanica case involving the AW-101 procurement. The Italian courts have quashed the entire case against corruption involving the top levels of the company (including the AW-101 alleged bribery) and yet it has recently been announced the MoD is stalling all further deals with Finmeccanica and her subsidiaries (which are extensive) jeprodising countless Indian defence deals both close to completion, signed for or on the anvil across the board- Helos, torpedoes, small arms, towed sonar arrays, arty etc etc. The fact is to date a money trail has not been established and it is near impossible to see on whose part the wrongdoing was (according to the Italian courts it was no one) and yet this decision was taken along with the (retarded) move to scrap all 3 already- in- IAF- hands AW-101s despite these being the best head of state helos available on the market. Now the IAF is having to make do with antiquated Mi-8s and take frontline V5s out of their operational fleet and convert them into VVIP transport helos which they are in no way certified nor adequate to do. What a complete and utter clusterf*ck.

I really hope the new GoI/MoD will take more pragmatic decisions but I just don't know.......

Contrary to first impressions that legal proceedings in Italy on corruption charges into the 2010 VVIP chopper deal with India have been shelved, defence major Finmeccanica has entered into a plea bargain with prosecutors, agreeing to paying a fine in return of the company not being made criminally liable for the alleged actions of bribery by its former top executives who face prison terms.
Making it clear that corruption charges still stand against the former CEO of Finmeccanica Giuseppe Orsi and former CEO of AgustaWestland Bruno Spagnolini besides several middlemen, the prosecutors have agreed not to press for a clause that makes the Italian defence company liable for crimes committed by its employees in return of what Finmeccanica calls a "negligible fine" to be paid by the entity.

"The decision to settle with the Prosecutor was taken, in light of the reorganization underway within the Finmeccanica Group, to refocus energies on business and market opportunities globally. This decision is not in any way an admission of any wrongdoing or liability," the company has said in a statement on the plea bargain.

The agreement reached between the prosecutor and the company entails that the former drops its charges under the Italian Act 231 that puts criminal liability on a company for any breaches committed by its employees, sources said.

A similar agreement had earlier been made by the prosecutors with key middleman Guido Haschke who was accused of sending money to the Tyagi family in India to swing the deal. Haschke has already agreed to a 22-month prison term as part of his plea bargain.

However, the corruption case against the two former CEOs and Guido Haschke, the alleged middleman for the deal, continues in the court of Busto Arsizio and the final verdict is expected in early October.

Sources said the plea bargain does let off Finmeccanica that has 30 per cent government ownership from criminal prosecution but does not protect its former executives that have been accused of bribing Indian officials including former air chief marshal S.P. Tyagi with the assistance of middlemen based in the UK and Switzerland.



: VVIP chopper deal: Investigations not 'shelved', Finmeccanica enters plea bargain : India, News - India Today

 

[Malik Alashter]

Guys how much $ per crore?

like 3500 crore equal how much?.

 

[nik22]

Guys how much $ per crore?

like 3500 crore equal how much?.

Like $600 million USD

 

[shree835]

This is too late BAE...

 

[Skull and Bones]

Wasn't the contract cancelled because of increasing price and closing of production line?