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As per media reports, the Defence Acquisition Council headed by the Raksha Mantri deferred on February 24, 2014, several defence deals, including the acquisition of M777 Ultra-Light Howitzers (ULH) from BAE Systems through the US Government.This starkly contrasted to earlier reports of 14 February 2014, wherein the Defence Procurement Board (DPB) headed by Defence Secretary RK Mathur, gave the final approval to the much-delayed deal. A resource crunch has reportedly led to the deferment. With elections due and a new government coming in, the deal stands significantly delayed to the next financial year with consequent cost escalation.
The Army’s quest to acquire new artillery guns seems unending. It seemed that finally after two and half decades there will be induction of new ultra-light guns in the form of M777 howitzers, the first since the Bofors, acquired in the 80’s.During the Kargil war in 1999, Bofors guns pounding enemy fortifications on the icy mountains became the hallmark and helped turn the tide of the war. They have proven the indispensible role of artillery in ground suppression and area domination. The ULH are crucial to equip the recently raised mountain divisions along India’s Northern Borders and to make up voids in existing formations. These are transportable by helicopters making them ideal for such conditions. Another deal for acquiring Boeing Chinook’s, which can transport these guns, is in the stage of final contractual negotiations. The initial order for 145 guns could rise significantly, as the army plans to induct artillery in large numbers to replace existing equipment and for the new raisings.
India contracted for the purchase of 145 BAE M777 Ultra-Light howitzers from the US through the Foreign Military Sales (FMS) route. The sluggish procurement procedure has already led to severe cost escalation. The Department of Defense (Pentagon’s) press release on Aug 07, 2013 reads “The Defense Security Cooperation Agency notified Congress on Aug 02, 2013 of a possible Foreign Military Sale India of 145 M777 155mm/39 calibre Light-Weight Towed Howitzers and associated equipment, parts, training and logistical support for an estimated cost of $885 million”.This is a re-notification to the earlier one of Jan 26, 2010, which pegged the cost of the deal at $647 million.This 36 percent cost escalation is partly due to the dollar appreciation in the last three years and also because the manufacturer BAE Systems has started shutting down the production line in UK due to lack of orders. Adding the depreciation of the rupee since then will double the value of the deal for the Indian exchequer. In fact India was well informed of the impending hike in the cost. BAE Systems has spent $50 million to keep the production line open and tied up with suppliers in anticipation of an Indian order. However, as the company kept losing money, it initiated the shutdown procedure last October, started the mandatory consultations with trade unions and 200 employees have since been laid off.
“In accordance with the Indian Defense Procurement Procedure (DPP), it is anticipated that the vendor will be required to negotiate an offset contract with the government of India,” the notification to the Congress says. News reports indicate that the deal has been stuck on the offset requirements. Officially, though, there was no comment from the Government of India on the reasons for the delay but whatever the reason,India would now have to pay hundreds of millions of dollars more from its already meagre resources. The other artillery procurement efforts for various types of howitzers too are reportedly delayed. Now the Government of India has to re-negotiate with the US Government to reissue the notification, so that it can complete the contract in the stipulated time.
There however appears to be a silver lining in the delay. The Ordnance Factory Board (OFB) has developed an upgraded version of the existing 155mm/45 calibre howitzer based on the earlier Bofors blueprints, which were lying with us all along. BAE systems has offered technical help in the upgrade. The upgrade to 45 calibre from 39 calibre effectively improves the maximum range to 38 km from the earlier 30km. There was a setback though as the recent field trials have failed as the gun barrel burst. The OFB claims to have rectified the problem and conducted successful trials after the mishap.It is confident that it will clear the trial this time and also displayed the equipment recently at the DefExpo 2014. Fingers are now crossed for another round of trials by the Army to be held in March/April. Some major Indian industrial houses too have got into manufacturing howitzers by tying up with foreign manufacturers, which will develop crucial capabilities within the country. These are under various stages of development, but are still sometime away from fruition. For now though, the Indian Army’s artillery acquisition stands inevitably delayed.
Indian Army’s Unending Artillery Woes
The Army’s quest to acquire new artillery guns seems unending. It seemed that finally after two and half decades there will be induction of new ultra-light guns in the form of M777 howitzers, the first since the Bofors, acquired in the 80’s.During the Kargil war in 1999, Bofors guns pounding enemy fortifications on the icy mountains became the hallmark and helped turn the tide of the war. They have proven the indispensible role of artillery in ground suppression and area domination. The ULH are crucial to equip the recently raised mountain divisions along India’s Northern Borders and to make up voids in existing formations. These are transportable by helicopters making them ideal for such conditions. Another deal for acquiring Boeing Chinook’s, which can transport these guns, is in the stage of final contractual negotiations. The initial order for 145 guns could rise significantly, as the army plans to induct artillery in large numbers to replace existing equipment and for the new raisings.
India contracted for the purchase of 145 BAE M777 Ultra-Light howitzers from the US through the Foreign Military Sales (FMS) route. The sluggish procurement procedure has already led to severe cost escalation. The Department of Defense (Pentagon’s) press release on Aug 07, 2013 reads “The Defense Security Cooperation Agency notified Congress on Aug 02, 2013 of a possible Foreign Military Sale India of 145 M777 155mm/39 calibre Light-Weight Towed Howitzers and associated equipment, parts, training and logistical support for an estimated cost of $885 million”.This is a re-notification to the earlier one of Jan 26, 2010, which pegged the cost of the deal at $647 million.This 36 percent cost escalation is partly due to the dollar appreciation in the last three years and also because the manufacturer BAE Systems has started shutting down the production line in UK due to lack of orders. Adding the depreciation of the rupee since then will double the value of the deal for the Indian exchequer. In fact India was well informed of the impending hike in the cost. BAE Systems has spent $50 million to keep the production line open and tied up with suppliers in anticipation of an Indian order. However, as the company kept losing money, it initiated the shutdown procedure last October, started the mandatory consultations with trade unions and 200 employees have since been laid off.
“In accordance with the Indian Defense Procurement Procedure (DPP), it is anticipated that the vendor will be required to negotiate an offset contract with the government of India,” the notification to the Congress says. News reports indicate that the deal has been stuck on the offset requirements. Officially, though, there was no comment from the Government of India on the reasons for the delay but whatever the reason,India would now have to pay hundreds of millions of dollars more from its already meagre resources. The other artillery procurement efforts for various types of howitzers too are reportedly delayed. Now the Government of India has to re-negotiate with the US Government to reissue the notification, so that it can complete the contract in the stipulated time.
There however appears to be a silver lining in the delay. The Ordnance Factory Board (OFB) has developed an upgraded version of the existing 155mm/45 calibre howitzer based on the earlier Bofors blueprints, which were lying with us all along. BAE systems has offered technical help in the upgrade. The upgrade to 45 calibre from 39 calibre effectively improves the maximum range to 38 km from the earlier 30km. There was a setback though as the recent field trials have failed as the gun barrel burst. The OFB claims to have rectified the problem and conducted successful trials after the mishap.It is confident that it will clear the trial this time and also displayed the equipment recently at the DefExpo 2014. Fingers are now crossed for another round of trials by the Army to be held in March/April. Some major Indian industrial houses too have got into manufacturing howitzers by tying up with foreign manufacturers, which will develop crucial capabilities within the country. These are under various stages of development, but are still sometime away from fruition. For now though, the Indian Army’s artillery acquisition stands inevitably delayed.
Indian Army’s Unending Artillery Woes
