August 3, 2015

Bharat Forge predicted collaboration on air defence guns to German company Rheinmetall before DAC meeting

More than a week before a high-powered defence ministry committee, whose agenda and minutes are always kept secret, decided to clear a Rs 16,000-crore project, Bharat Forge wrote to a blacklisted German arms manufacturer, Rheinmetall, accurately predicting what the committee would clear and exploring collaboration possibilities with the German company.
ET has reviewed the relevant documents and they show that a Bharat Forge senior executive wrote to Dusseldorf-head quartered Rheinmetall on July 6, while the Defence Acquisition Committee (DAC) met on July 14. That July 14 meeting, ET has learnt, cleared the procurement of state-of-the-art air defence guns, with an estimated project size of Rs 16,000 crore.
The July 6 email from Bharat Forge’s Associate Vice-President-Defence, Col GNM Rao (retd), read: “I would like to update you that the procurement proposal for procurement of air defence guns under ‘buy and make (Indian)’ category is being fielded in defence acquisition counsel (sic) during this month for approval. The approval by DAC is likely to come through as lower committees already recommended the proposal. Considering that the proposal is approved in July 15, it is likely that the RFP (request for proposal) will be issued by Nov/Dec 15.” “It is time for us to decide on way ahead and discuss a plan to participate in the programme. Request you to suggest an action plan,” the email also noted.
When approached for a comment by ET, Bharat Forge said in a written reply: “As a group, we have written to number of technology providers for this program and will tie-up with the most suitable one and one who is approved by Indian MoD for the programme.” When asked by ET, how its executive had foreseen the decision of the DAC, which was to meet a week later, the Bharat Forge spokesperson said, referring to the reply quoted above: “Same as above, we are in touch with number of technology providers seeking an action plan.”
Defence ministry officials told ET that any questions on this matter will be taken up at later stages of the procurement process and that they didn’t wish to comment now.
The DAC is a high-powered panel led by the defence minister that takes a call on all major procurement plans. Typically, the three armed forces make a pitch for their procurements at DAC meetings that take place once every month or two. The agenda is drawn a few days in advance and is not circulated generally.
ET has learnt that the July 14 DAC meeting did have the air defence gun on its agenda and the decision was taken that the Army should go ahead with the procurement and that Indian companies should be invited to submit bids. The meeting had started on 4 pm that day and had lasted close to three hours. The Army has for long been trying to acquire a new air defence gun. It currently relies on 1960s technology — the L70/ZU 33 guns. Earlier, efforts to get a modern gun from Rheinmetall in partnership with the Ordnance Factory Board (OFB) went nowhere after the European company was accused of corruption in the course of a CBI probe into the OFB. The company got into further trouble when its name also figured in a CBI investigation into arms dealer and lobbyistAbhishek Verma. Rheinmetall did not respond to ET’s questions.
The dilemma for the Army has been that Rheinmetall’s gun is most suited for its purpose. Currently, the procurement process has been initiated by inviting Indian bidders who will look for foreign collaborators. Bharat Forge, Punj Lloyd and L&T are expected to be lead contenders.


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