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Rs 50,000 crore contest to build future combat vehicle kicks off today

Ankit Kumar

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By Ajai Shukla
Business Standard, 15th Feb 16

On Monday, ten Indian companies will submit proposals to the defence ministry for designing, developing and manufacturing a “future infantry combat vehicle” (FICV) --- an armoured, tracked vehicle that will carry soldiers into battle.

A ministry team will choose the two best proposals, while the public sector Ordnance Factory Board (OFB) gets a free pass, being a defence ministry entity. These three development agencies (DAs) will each develop an FICV prototype, with the defence ministry paying 80 per cent of the cost. The best will be chosen and 2,600 FICVs built to that design to replace the army’s ageing BMP-II ICV fleet.

The FICV is required to be amphibious, and transportable in the air force’s IL-76 and C-17 aircraft. It must fire missiles that destroy enemy tanks at ranges of 4,000 metres.

The ten firms that received Expressions of Interest from the defence ministry on July 16, 2015 are --- Larsen & Toubro (L&T); Tata Power (Strategic Engineering Division); Tata Motors; Mahindra & Mahindra; Bharat Forge; Pipavav Defence; Rolta India; Punj Lloyd; Titagarh Wagons and the OFB.

Business Standard learns these companies have formed consortia between themselves, and tied up technology partnerships with foreign vendors. In selecting the DAs, the defence ministry would evaluate three parameters in their bid, namely technology levels; financial strength and indigenisation capability. The selection process is likely to take about 12 months.

The major tie-ups between companies are enumerated below.

The Tatas are not bidding as a group, although Tata Group headquarters wanted Tata Motors to bid in partnership with Tata Power (SED). However, after the defence ministry ruled that Tata Motors’ overseas income from Jaguar Land Rover (JLR) would not be countable towards the financial strength of the company, Tata Power (SED) concluded that partnering Tata Motors would hamstring its own bid.

Now Tata Motors is bidding in consortium with Bharat Forge; and they have co-opted US major, General Dynamics (GD), as a technology partner. Over the years, GD has built highly successful armoured vehicles, including the US Army’s M-1 Abrams tank; and the Stryker ICV.

Meanwhile, Tata Power (SED) is going it alone, having gained confidence from being selected as a DA in both the “Make” projects already awarded --- the Tactical Communications System, and the Battlefield Management System. In both these bids, it was in consortium with L&T.

Tata Power (SED)’s strength lies in systems integration. It will also benefit from its on-going collaboration with Korean firm, Dusan, in a separate tender for building an armoured vehicle for a mobile air defence system to replace the Russian Tangushka.

At the time of going to press, L&T was still in negotiations with the Mahindras, trying to hammer out a joint bid, which will incorporate technology from UK-based BAE Systems. L&T is already partnering Korean firm, Samsung Heavy Engineering, for building the K-7 Thunder, self-propelled artillery gun, which will provide it access to armoured vehicle technologies. L&T also has experience in designing the NAMICA (Nag missile carrier) for the Defence R&D Organisation (DRDO).

The OFB, which has been granted automatic nomination as a DA, has never designed an armoured vehicle. It has built the T-90 and Arjun tanks, and the BMP-II, but only based on transferred technology and manufacturing blueprints. Industry rumours indicate that several Israeli firms have approached OFB and offered to entirely design the FICV, which the OFB can then assemble at its factory in Medak.

The nine private firms are protesting this favoured treatment, despite repeated defence ministry promises of a level playing field. Private firms say the OFB’s assembly line at Medak should being made available to the winning DA on a “government owned company operated” (GOCO) basis. Instead of incurring the expenditure of a brand new assembly line, the winning DA can pay to build the FICV at Medak.

It is learnt that the OFB had earlier explored cooperation with Russia’s military export agency, Rosoboronexport, but the army told OFB it “did not want a BMP-III”.

Each DA will spend an estimated Rs 1,000 crore in developing their prototype. Manufacturing 2,600 FICVs over about a decade would cost another Rs 50,000 crore.


This “Make” project is being processed under the Defence Procurement Policy of 2008. To be eligible, DPP-2008 mandates that a company should have been registered for at least 10 years; have capital assets in India of at least Rs 100 crore and a turnover greater than Rs 1,000 crore for each of the preceding three years, and a minimum credit rating equivalent to CRISIL/ICRA “A”.


Broadsword: Rs 50,000 crore contest to build future combat vehicle kicks off today
 
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By Ajai Shukla
Business Standard, 15th Feb 16

On Monday, ten Indian companies will submit proposals to the defence ministry for designing, developing and manufacturing a “future infantry combat vehicle” (FICV) --- an armoured, tracked vehicle that will carry soldiers into battle.

A ministry team will choose the two best proposals, while the public sector Ordnance Factory Board (OFB) gets a free pass, being a defence ministry entity. These three development agencies (DAs) will each develop an FICV prototype, with the defence ministry paying 80 per cent of the cost. The best will be chosen and 2,600 FICVs built to that design to replace the army’s ageing BMP-II ICV fleet.

The FICV is required to be amphibious, and transportable in the air force’s IL-76 and C-17 aircraft. It must fire missiles that destroy enemy tanks at ranges of 4,000 metres.

The ten firms that received Expressions of Interest from the defence ministry on July 16, 2015 are --- Larsen & Toubro (L&T); Tata Power (Strategic Engineering Division); Tata Motors; Mahindra & Mahindra; Bharat Forge; Pipavav Defence; Rolta India; Punj Lloyd; Titagarh Wagons and the OFB.

Business Standard learns these companies have formed consortia between themselves, and tied up technology partnerships with foreign vendors. In selecting the DAs, the defence ministry would evaluate three parameters in their bid, namely technology levels; financial strength and indigenisation capability. The selection process is likely to take about 12 months.

The major tie-ups between companies are enumerated below.

The Tatas are not bidding as a group, although Tata Group headquarters wanted Tata Motors to bid in partnership with Tata Power (SED). However, after the defence ministry ruled that Tata Motors’ overseas income from Jaguar Land Rover (JLR) would not be countable towards the financial strength of the company, Tata Power (SED) concluded that partnering Tata Motors would hamstring its own bid.

Now Tata Motors is bidding in consortium with Bharat Forge; and they have co-opted US major, General Dynamics (GD), as a technology partner. Over the years, GD has built highly successful armoured vehicles, including the US Army’s M-1 Abrams tank; and the Stryker ICV.

Meanwhile, Tata Power (SED) is going it alone, having gained confidence from being selected as a DA in both the “Make” projects already awarded --- the Tactical Communications System, and the Battlefield Management System. In both these bids, it was in consortium with L&T.

Tata Power (SED)’s strength lies in systems integration. It will also benefit from its on-going collaboration with Korean firm, Dusan, in a separate tender for building an armoured vehicle for a mobile air defence system to replace the Russian Tangushka.

At the time of going to press, L&T was still in negotiations with the Mahindras, trying to hammer out a joint bid, which will incorporate technology from UK-based BAE Systems. L&T is already partnering Korean firm, Samsung Heavy Engineering, for building the K-7 Thunder, self-propelled artillery gun, which will provide it access to armoured vehicle technologies. L&T also has experience in designing the NAMICA (Nag missile carrier) for the Defence R&D Organisation (DRDO).

The OFB, which has been granted automatic nomination as a DA, has never designed an armoured vehicle. It has built the T-90 and Arjun tanks, and the BMP-II, but only based on transferred technology and manufacturing blueprints. Industry rumours indicate that several Israeli firms have approached OFB and offered to entirely design the FICV, which the OFB can then assemble at its factory in Medak.

The nine private firms are protesting this favoured treatment, despite repeated defence ministry promises of a level playing field. Private firms say the OFB’s assembly line at Medak should being made available to the winning DA on a “government owned company operated” (GOCO) basis. Instead of incurring the expenditure of a brand new assembly line, the winning DA can pay to build the FICV at Medak.

It is learnt that the OFB had earlier explored cooperation with Russia’s military export agency, Rosoboronexport, but the army told OFB it “did not want a BMP-III”.

Each DA will spend an estimated Rs 1,000 crore in developing their prototype. Manufacturing 2,600 FICVs over about a decade would cost another Rs 50,000 crore.


This “Make” project is being processed under the Defence Procurement Policy of 2008. To be eligible, DPP-2008 mandates that a company should have been registered for at least 10 years; have capital assets in India of at least Rs 100 crore and a turnover greater than Rs 1,000 crore for each of the preceding three years, and a minimum credit rating equivalent to CRISIL/ICRA “A”.


Broadsword: Rs 50,000 crore contest to build future combat vehicle kicks off today
So the bids are from TATA motors (tied up with GD and Kaylani Group), TATA Power (SED), (hopefully) L&T/Mahindra (tied up with BAE and I'm gussesing Samsung potentially?), Pipavav Defence, Rolta India, Punj Lloyd, Titagarh Wagons and the OFB.

^ Could seem some VERY interesting designs- mouth watering prospects.

I agree @Water Car Engineer it is a joke that OFB get 30% of the available finalist slots just for being a DPSU with no consideration of the merits of their product. I understand that this is an appeasment measure and they are unlikely to win when pitted against some of the giants mentioned above but it still makes my blood boil.



@PARIKRAMA @Levina @anant_s @acetophenol @Unknowncommando @mkb95 @ni8mare @Koovie @hellfire @knight11 @ito @Bornubus @ranjeet @MilSpec @nair @Skull and Bones @SpArK @Vauban @Dash @ayesha.a @Parul @janon @The_Showstopper @the@IndoCarib @IndoUS @Omega007 @XiNiX @star @The_Sidewinder @kurup @AUSTERLITZ @Taygibay @arp2041 @SRP @Masterhunter @Roybot @sathya @Chanakya's_Chant @hinduguy @SrNair @Mirza Jatt @scorpionx @kbd-raaf @Echo_419 your comments are always welcome.
 
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So the bids are from TATA motors (tied up with GD and Kaylani Group), TATA Power (SED), (hopefully) L&T/Mahindra (tied up with BAE and I'm gussesing Samsung potentially?), Pipavav Defence, Rolta India, Punj Lloyd, Titagarh Wagons and the OFB.

^ Could seem some VERY interesting designs- mouth watering prospects.

I agree @Water Car Engineer it is a joke that OFB get 30% of the available finalist slots just for being a DPSU with no consideration of the merits of their product. I understand that this is an appeasment measure and they are unlikely to win when pitted against some of the giants mentioned above but it still makes my blood boil.



@PARIKRAMA @Levina @anant_s @acetophenol @mkb95 @ni8mare @hellfire @knight11 @MilSpec @nair @SpArK @Vauban @Parul @AUSTERLITZ @Taygibay your comments are alsways welcome.

I am not writing off OFB so easily. They may tie up with the Israeli companies .... and their lies a potential machine in making.

But yes, it's unfair for others , despite promising a level playing field, its not so even
 
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I am not writing off OFB so easily. They may tie up with the Israeli companies .... and their lies a potential machine in making.
No way do they make an offer as compelling as the private sector- NO WAY (Ceteris paribus).

It is not just about the product but all aspects relating to the production, support and maintence of the product over its lifespan. The OFB may produce an okay(ish) product by tieing up with a foreign entity but their offer on the whole would be under extreme pressure from these private houses (with vast capital in their hands) especially when they are also tieing up with foreign industry leaders who know how to take products from inception into mass production. And these private entities are hungry, if they are given a sniff at this market they will go for blood- just as they had done in the automotive sector. The productive capacity of a giant like TATA alone dwarfs anything the OFB could even dream of.

I am pretty confident that under the MoD and this GoI particuarly that this competition will be carried out in a very fair and transparant manner and would thus bet my house on the fact that the OFB stands no chance of winning this competition in the end.
 
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Good going. :woot:
Privatize the Defense industry more and more.
As the India's economy expands and goes more capitalized, we can have a much better military goods procurement structure to counter major threats as major power in long term.
 
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I agree @Water Car Engineer it is a joke that OFB get 30% of the available finalist slots just for being a DPSU with no consideration of the merits of their product. I understand that this is an appeasment measure and they are unlikely to win when pitted against some of the giants mentioned above but it still makes my blood boil

You forgot Indian quota system...always aims at upliftment of the "underprivileged" so... :D
 
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So the bids are from TATA motors (tied up with GD and Kaylani Group), TATA Power (SED), (hopefully) L&T/Mahindra (tied up with BAE and I'm gussesing Samsung potentially?), Pipavav Defence, Rolta India, Punj Lloyd, Titagarh Wagons and the OFB.

^ Could seem some VERY interesting designs- mouth watering prospects.

I agree @Water Car Engineer it is a joke that OFB get 30% of the available finalist slots just for being a DPSU with no consideration of the merits of their product. I understand that this is an appeasment measure and they are unlikely to win when pitted against some of the giants mentioned above but it still makes my blood boil.



@PARIKRAMA @Levina @anant_s @acetophenol @mkb95 @ni8mare @hellfire @knight11 @MilSpec @nair @SpArK @Vauban @Dash @Parul @AUSTERLITZ @Taygibay @sathya @SrNair @kbd-raaf your comments are always welcome.

Don't worry, these idiots will bite dust when facing competition from the likes of TATA
 
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So the bids are from TATA motors (tied up with GD and Kaylani Group), TATA Power (SED), (hopefully) L&T/Mahindra (tied up with BAE and I'm gussesing Samsung potentially?), Pipavav Defence, Rolta India, Punj Lloyd, Titagarh Wagons and the OFB.

^ Could seem some VERY interesting designs- mouth watering prospects.

I agree @Water Car Engineer it is a joke that OFB get 30% of the available finalist slots just for being a DPSU with no consideration of the merits of their product. I understand that this is an appeasment measure and they are unlikely to win when pitted against some of the giants mentioned above but it still makes my blood boil.



@PARIKRAMA @Levina @anant_s @acetophenol @Unknowncommando @mkb95 @ni8mare @Koovie @hellfire @knight11 @ito @Bornubus @ranjeet @MilSpec @nair @Skull and Bones @SpArK @Vauban @Dash @ayesha.a @Parul @janon @The_Showstopper @the@IndoCarib @IndoUS @Omega007 @XiNiX @star @The_Sidewinder @kurup @AUSTERLITZ @Taygibay @arp2041 @SRP @Masterhunter @Roybot @sathya @Chanakya's_Chant @hinduguy @SrNair @Mirza Jatt @scorpionx @kbd-raaf @Echo_419 your comments are always welcome.
we cant expect it to be perfect right away,but its a decision in right direction.
ofb is the only firm making such combat vehicle right now and govt. dont want to drop them.
 
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@Abingdonboy @Ankit Kumar @Water Car Engineer
Israel's rafael is also entering but via a covert way... If you see Ajai Shukla mentions tie up via OFB

Industry rumours indicate that several Israeli firms have approached OFB and offered to entirely design the FICV, which the OFB can then assemble at its factory in Medak.

But look at this also
India's Bharat Forge to form joint venture with Rafael
Jon Grevatt, Bangkok - IHS Jane's Defence Industry
09 February 2016

Indian company Bharat Forge Limited (BFL) has entered an agreement with Israel's Rafael Advanced Defense Systems Limited to form a joint venture (JV) to produce defence electronics and carry out military vehicle upgrades.

BFL said in a filing to the Bombay Stock Exchange on 9 February that the JV with Rafael will initially look to win Indian Ministry of Defence (MoD) contracts to upgrade the Indian Army's Russian BMP-2/2K 'Sarath' infantry combat vehicles (ICVs) as well as to manufacture tactical control systems and "other advanced systems".

Investment in the JV will be channelled through BFL's defence division, Kalyani Strategic Systems Limited (KSSL), which specialises in manufacturing artillery systems, ammunition, military vehicles, defence electronics, and components for armoured fighting vehicles.
India's Bharat Forge to form joint venture with Rafael | IHS Jane's 360
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Thus it does make an interesting assessment what actually Tata Motors is bidding in consortium with Bharat Forge, General Dynamics and Bharat Forge JV with Rafael brings into the whole equation..

Looking at competition, its going to be a good match..

If OFB are sureshot getting 30% work, then dont you think with Rafael JV its more or less a pre decided competition owing to Israeli tie up in both sides? I may be wrong but from business point of view this seems a master stroke

A;lso other than Rafael what other Israeli company is there which can do such projects?
 
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If OFB are sureshot getting 30% work, then dont you think with Rafael JV its more or less a pre decided competition owing to Israeli tie up in both sides? I may be wrong but from business point of view this seems a master stroke
Not quite bro. OFB is assured of a place as a "finalist" (there being 3 slots) and the reamaining 9 contenders will fight it out for the other 2 slots. OFB (and its partners) are not assured of actually securing anything- I still think the private players will destroy OFB's offer. But you make an interesting point about the Rafael JV with OFB, surely OFB would have to expand its scope to include the FICV if its competitors are tieing up with giants like BAE and GD.
 
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@Abingdonboy @MilSpec @SpArK @AUSTERLITZ @nair @anant_s @Vauban @Taygibay @Water Car Engineer
From a report by Ernst and Young published in Jan 2016, it covers basically
  • Basic requirements
  • Assessment of Developmental Agendas (DAs)
  • Assessment Criteria (with break up and %)
  • Technology Transfer
This is a pretty detailed work....

FICV 1.jpg


FICV 2.jpg


FICV 3.jpg
 
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@Abingdonboy @Ankit Kumar @Water Car Engineer
Israel's rafael is also entering but via a covert way... If you see Ajai Shukla mentions tie up via OFB



But look at this also
India's Bharat Forge to form joint venture with Rafael
Jon Grevatt, Bangkok - IHS Jane's Defence Industry
09 February 2016

Indian company Bharat Forge Limited (BFL) has entered an agreement with Israel's Rafael Advanced Defense Systems Limited to form a joint venture (JV) to produce defence electronics and carry out military vehicle upgrades.

BFL said in a filing to the Bombay Stock Exchange on 9 February that the JV with Rafael will initially look to win Indian Ministry of Defence (MoD) contracts to upgrade the Indian Army's Russian BMP-2/2K 'Sarath' infantry combat vehicles (ICVs) as well as to manufacture tactical control systems and "other advanced systems".

Investment in the JV will be channelled through BFL's defence division, Kalyani Strategic Systems Limited (KSSL), which specialises in manufacturing artillery systems, ammunition, military vehicles, defence electronics, and components for armoured fighting vehicles.
India's Bharat Forge to form joint venture with Rafael | IHS Jane's 360
++

Thus it does make an interesting assessment what actually Tata Motors is bidding in consortium with Bharat Forge, General Dynamics and Bharat Forge JV with Rafael brings into the whole equation..

Looking at competition, its going to be a good match..

If OFB are sureshot getting 30% work, then dont you think with Rafael JV its more or less a pre decided competition owing to Israeli tie up in both sides? I may be wrong but from business point of view this seems a master stroke

A;lso other than Rafael what other Israeli company is there which can do such projects?
The BFL Rafael JV is for the bmp2 upgrades....i dont think they will be bidding for ficv.....1200 bmp2 upgrades is a big order in itself.......on the other hand bfl-tata-gd tie up will be taking part in the ficv tender

And Rs 50,000 crore for 2600 ficv?
Isnt this a bit costly considering bmp2 costs around 6-7cr a pop
 
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The BFL Rafael JV is for the bmp2 upgrades....i dont think they will be bidding for ficv.....1200 bmp2 upgrades is a big order in itself.......on the other hand bfl-tata-gd tie up will be taking part in the ficv tender

And Rs 50,000 crore for 2600 ficv?
Isnt this a bit costly considering bmp2 costs around 6-7cr a pop
This includes ATGM with launcher also and its max govt is willing to spend. Actual tender may cost less.
 
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