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Weapons of Mass Destruction (WMD)

India Opens $3 Billion Ammo Tender for Private Sector to Curb Import Dependency

Sputnik News

17:42 17.04.2017

The Indian defense ministry has floated a tender for private ammunition makers in India to supply ammunition worth $3 billion to the armed forces over the next decade. Currently, 11 government-owned ordnance factories have a monopoly over the production of ammunitions.

New Delhi (Sputnik) – Last year, the Indian government approved the private sector to produce ammunition as part of the Make in India program.

The defense ministry floated a tender from a domestic private manufacturer for the supply of a range of ammunition. The list includes 125mm armor-piercing types for T-90 & T-72, 40mm multiple grenade launcher/underbarrel grenade launcher ammo, 30mm ammunition used by armored infantry carrying vehicle, 122mm grad rockets for Pinaka series and bi-modular charge system.

Twenty-five Indian companies responded to the request issued by the ministry last November. Kalyani Group, Reliance Defence and Engineering Ltd and Godrej & Boyce are among the companies that responded to the bid.

Indian companies can form a joint venture with foreign companies to produce such items under complete transfer of technology agreement but the latter can't hold a majority stake in the joint venture. Indian companies will have to adopt the technology completely within five years of the signing of the contract. Russian company Rosoboronexport, Rheinmetall Defense, Diehl Defense of Germany and Elbit of Israel may form a joint venture with Indian companies for the production. The Indian government also provides export options to these companies.

Despite being short on capacity, the Indian government did not provide opportunities for private defense industries in the country. On average, the Ordnance Factories Board (OFB) achieved targets by 80 percent and above in 51 percent of the instances during 2011 to 2014. But in 28 percent of the instances, the achievement was less than 60 percent.

"The absence of competition and the high cost of import coupled with the availability of assured funds with the inventors, created a situation in which the Armed Forces generally accepted the products from the Board regardless of the high issue prices," said an audit presented by the Indian government auditor last year. The current offer mainly aims to create an environment in the country so that armed forces need not depend on the OFB only in a crisis-like situation.

"The OFB needs to be restructured and some of the more unproductive ordnance factories (OFs) need to be shut down. They are unable to meet the demand of the Services, suffer from serious quality issues, are overpriced and the worker productivity as compared to comparable defense structures in the private sector is very low. The OFB should perhaps be taken out of the defense ministry and placed under the industry ministry and asked to compete with other defense manufacturers," Major General Dhruv C Katoch (retired) said.

Ordnance factories have, however, augmented the infrastructure and capacity to meet the Minimum Acceptable Risk Level requirement. The OFB has achieved 35% growth in 2015-16 compared to 2014-15, which is unprecedented as per industry standards and show its commitment to meet the requirements of the armed forces.


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