New Delhi: After years of searching for an anti-tank guided missile (ATGM) and finalizing an Israeli product, the Army has dramatically called off the deal because of fears of the single tender procurement erupting into a controversy in the future.
According to sources, the ATGM deal worth about Rs 15,000 crore, the biggest deal in recent times for the Army, was listed on the agenda of the defence acquisition council (DAC), headed by defence minister AK Antony, on April 2. It was originally meant to be cleared by the council for final approval of the Cabinet committee on security (CCS) headed by the Prime Minister.
However, Army chief General Bikram Singh is believed to have told the DAC that the Army was cancelling the deal and opting for a fresh process. The Army chief's move has surprised many, because of the aggressive way Army headquarters had been pushing the deal until then.
The deal is meant to equip 356 infantry battalions of the Army with the latest ATGMs. The Indian Army had been in advance stages of negotiations with Rafael Advanced Defence Systems of Israel for purchase of Spike ATGMs.
The Army had been searching for the past several years for a modern anti-tank missile to replace Milan and Konkurs - both in service with the Army for a few decades now. First, the Army zeroed in on a government-to-government deal with the US for the Javelin missiles - jointly produced by Raytheon and Lockheed Martin - but it fell through after the US refused transfer of technology for indigenous production in India by Bharat Dynamics Limited.
While some sources insist that the deal could be brought back to the desk after a global technology scan and ensuring that there are no other options available, there is now clarity on the issue. Sources admit that the deal is over, and a fresh process will start.
Sources said the era of single vendor procurements - unless it is an extraordinary situation - is virtually over. In recent years, companies from Russia, Israel and even the US have bagged several contracts through single vendor situations.
The DAC has approved several amendments to the way military equipment is purchased in the country. Among them are a series of measures to increase accountability in terms of timeframe for selecting a product. The DAC has also approved removal of all references to Raksha Udyog Ratnas from the Defence Procurement Procedure.
The status was meant to be granted to about a dozen firms, which were to be given preferential treatment at par with defence PSUs in military contracts. The second amendment is that the acceptance of necessity, the first step in procurement, will be granted only after services have prepared the (general staff qualitative requirement) for an equipment.