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Ashok Leyland’s deal with Rosoboronexport strengthens bid for Rs 60K cr army project

The signing of the memorandum of understanding (MoU) on cooperation with Russia’s Rosoboronexport last week has opened the door wider for commercial vehicle specialist Ashok Leyland to make an aggressive bid for the Army’s Futuristic Infantry Combat Vehicle (FICV) project.

The Rs 60,000-crore project, which has been stuck since the past several years, is one of the first mega defence projects where private parties were invited to make a bid. A total of 2,600 of such combat vehicles are to be supplied to the Indian army over a period of a several years.

Speaking to Moneycontrol, Vinod Dasari, Managing Director, Ashok Leyland said, “We are quiet but we are there. We are doing the mobility part of it because that’s what we specialise in while our partner from Rosoboronexport will handle the combat vehicle platform part of it”.

Results of the bid were expected to be out by December last year which subsequently got pushed to March end. With three changes in the Defence Ministry in the span of five months (in less than half a year, India has had three Defence Ministers – Manohar Parrikar, Arun Jaitley and Nirmala Sitaraman) the project was put on the back burner.

The list of private companies who have thrown their hat in the ring include Larsen & Toubro, Tata Motors-Bharat Forge, Tata Power, Mahindra & Mahindra, Pipavav Defence and Punj Llyod. State-owned Ordnance Factory Board (OFB) could likely be automatically selected.

Top two companies are to be shortlisted to build one prototype of the FICV each. About 80 percent of the manufacturing cost of these prototypes are to be funded by the government. Subsequently, these prototypes which will be built at a cost of Rs 3,000-4,000 crore are to be tested and evaluated by the Army in different conditions.

However, the contract is to be split, with the winner getting a majority 60 percent of the supply contract while the runner-up takes the rest. The FICV will replace the existing BMP-2 Sarath, which was built by OFB under licence from Russia. There are approximately 900 BMP-2 infantry combat vehicles in operation with the Army.

Recent media reports stated that there has not been much of a headway in the FICV project as some of the contenders are non-compliant on commercial and technical capability.

Though there has been a substantial delay in finalising the top two bidders for the project manufacturers are optimistic about the appointment of Nirmala Sitaraman as the new Defence Minister.

“She has done a fantastic job as the Commerce Minister. She is very approachable. We went to her with a specific problem with regards to exports and she resolved it very quickly. I hope the defence procurement goes up substantially considering the pace at which she works. She is very sharp and she will pick up very fast. Our experience with her was very positive,” added Dasari.

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