June 5, 2015

Defence Deal With Israel Hits a Roadblock

The BJP-led NDA Government may have announced Prime Minister Narendra Modi’s plans to visit Israel, making him the country’s first ever Prime Minister to do so, but a defence procurement deal worth more than Rs 3,000 crore with that country for anti-tank guided missiles (ATGMs) for the Army has hit a roadblock.
The Army has been trying hard to equip all its 382 Infantry Battalions and 44 Mechanised Infantry units with these ATGMs, as it was hamstrung with more than 50 per cent shortage in that front.
In October, the Centre had approved the purchase of ‘Spike’, the third generation Israeli ATGMs, for the Army after extensive technical trials evaluated by the force. Following this, a Rs 3,200 crore deal was signed to procure 8,356 ATGMs from Rafal, an Israeli firm. The Spike missile was selected over the US’s Javeline missile system.
But sources in the Ministry of Defence(MoD) said seven months on, the Cost Negotiation Committee, which was formed to work out the modalities for the procurement deal, failed to make any headway.
Officials from the MoD and the Army have raised several objections to the commercial bids submitted by the Original Equipment Manufacturer (OEM) in the second week of May.
They claimed that the price quoted in the commercial bid was almost double that of the benchmark price. And moreover, the Israeli firm even asked for an additional amount on each missile to be produced in India, which would be above the cost of the transfer of technology.
“Besides, the OEM has asked for an yearly escalation of four per cent on all the supplies, including raw material to be sold to  the Bharat Dynamic Limited (BDL). In fact, after the transfer of technology to the BDL, the company has refused to take responsibility for any quality issues,” said an officer, who is privy to the developments. So, perturbed with the Israeli firm’s attitude,  the MoD has red-flagged its commercial bids. “We have discontinued the negotiations with the firm and asked it to reconcile and revert. It is an important project for the Army, which is in dire need of anti-tank missiles. At the same time, we cannot compromise on the terms and conditions,” the officer added.


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