India’s longest serving defence minister A K Antony, who was at the helm of affairs in the South Block till May, did not take the necessary steps required to conclude the government-to-government contract with the US to buy these howitzers for the Army.
“The case for procurement of Ultra-Light Howitzer guns through the US government has not progressed due to cost issues and because the vendor has not been able to come up with a proposal fully compliant to the offset requirements,” Defence Minister Arun Jaitley informed the Lok Sabha in a statement on Friday.
India did not buy any artillery since the Bofors guns of late 1980s.
Even though the Bofors guns proved their mettle in the Kargil conflict, many units are too old to be used, crippling the Army’s firepower.
The Ultra-Light Howitzer deal was under works for several years after successful trials of these guns in the mountains. The Army was planning to utilise these M-777 guns for high-altitude warfare in the North-East as well as in Jammu and Kashmir.
As the guns were to be purchased in a government-to-government deal, the initial offer from the US government since 2010 was for $647 million for 145 units.In March 2013, the US government offered a letter of offer and acceptance for the same deal at $694 million.
There was also a proposal on 30 per cent offset for the deal. The US offer came with an expiry date.
Despite several meetings between Indian and US officials, the defence ministry under Antony did not communicate its position to the US government within that stipulated time, resulting in the expiry of the deal, sources told Deccan Herald. If the Narendra Modi government wishes to revive the agreement with the US, there is a possibility of it quoting a higher price for the same deal, as the American government had taken an approval from the Congress to offer the M-777 deal to India at a ceiling price of $885 million.
The new ceiling price is almost 30 per cent more than the revised offer from the US.
In the absence of a decision from India, the gun’s manufacturer BAE System kept its production line at Barrow-in-Furness in the UK, under suspension.