Wednesday, 14 December 2016

Private sector rivals object to Tata Motors’ selection for building infantry combat vehicle

The army's workhorse BMP infantry combat vehicle, which the FICV will replace

By Ajai Shukla
Business Standard, 14th Dec 16

On Wednesday, the ministry of defence (MoD) will meet to clear two winners of India’s biggest “Make” programme --- a Rs 50,000 crore project to design, develop and manufacture 2,600 Future Infantry Combat Vehicles (FICVs) that will replace the army’s obsolescent fleet of Russian-origin BMP-II armoured infantry carriers.

But a battle royal is brewing up over the winners of this lucrative contest. While the selection of Larsen & Toubro (L&T) is acceptable across the board, at least two vendors --- Reliance Defence and Mahindra & Mahindra --- have objected to the selection of Tata Motors, which has bid in consortium with Bharat Forge.

Their primary objection is that Tata Motors does not meet the MoD’s commercial eligibility criteria, which requires a candidate company to have a “consistent profitable financial record showing profits in at least three years of the last five years and with no accumulated losses.” Tata Motors made a loss of Rs 4,739 crore last year, which was greater than its profits in the four preceding years.

Tata Motors has contended that if profits from its UK-based subsidiary, Jaguar Land Rover (JLR) were to be counted, it had a consolidated turnover last year of Rs 263,695 crore and a net profit of Rs 13,986 crore.

However, the objecting companies point out that the MoD had twice clarified, first in October 2015, and then in January 2016, that domestic operations alone would count towards a company’s commercial eligibility profile. If JLR’s profits were not to be counted, Tata Motors’ earned just Rs 38,176 crore from domestic operations last year, generating a loss of Rs 4,739 crore.

A second objection is over the foreign nationality of Tata Motors’ chief executive officer (CEO), Guenter Butschek, who was appointed on February 15. The criteria for a defence manufacturing licence requires a company’s CEO to be an Indian national.

Interestingly, in a long-drawn internal argument within the Tata Group, doubts over Tata Motors’ eligibility had been raised by its group company, Tata Power (Strategic Engineering Division), to justify bidding separately for the FICV.

This had been reported by Business Standard (February 15, “Rs 50,000 crore contest to build future combat vehicle kicks off today”). This has now been verified by Economic Times, which has quoted an unidentified Tata Sons board member, who says that Ratan Tata was “dismayed” when the two Tata group companies put in separate bids.

It is unclear how these objections will be viewed by the Defence Procurement Board (DPB), the MoD’s top procurement body that will consider the FICV decision on Wednesday.

The FICV is a tracked, armoured vehicle that protects infantrymen from small arms fire and artillery shrapnel while moving around the battlefield. According to the army’s specifications, the FICV is required to be amphibious and air-portable; and to fire anti-tank guided missiles that can destroy enemy tanks 4 kilometres away.

Eight Indian proposals to build the FICV were submitted to the MoD. These came from L&T; Tata Power (SED) in partnership with Titagarh Wagons; Tata Motors in partnership with Bharat Forge; Mahindra & Mahindra; Reliance Defence; Rolta India; Punj Lloyd, and the Ordnance Factory Board (OFB).

While the OFB will be automatically nominated, the DPB will select two more private sector consortia to design and develop the FICV. The MoD will reimburse 80 per cent of their design and development costs, and select the better of the two designs for production. 


Alok Asthana said...

Ridiculous to expect an Indian built FICV to be 'amphibious and air-portable; and to fire anti-tank guided missiles that can destroy enemy tanks 4 kilometres away'. Secondly, what is the need for this? Ask for the moon, so that at some time you can say that our chaps have not been able to give it to you so we need to import. Some General needs to be taken to task for this absurdity. Why is 'simple and reasonably effective' not our mantra?

Anonymous said...

I think the objections to Tata Motors are frivolous. LT with Bharat Forge and Tata Motors should emerge as the two final contenders specially when Tata SED / Tiatgarh is part of Tatas effectively making that as a conglomerate of a large numbers of LT and Tata subsidiaries including those dealing in metallurgy, system design, Engineering and software and system integration. OFB must be asked to watch / help them from a fringe if they can at all. Rest all are just bunkum.

Jean Luc Picard said...

@ Alok Asthana -

1. Sir, When the Piranha Design Based US Army Stryker can be Air Portable, Why cant the TATA, CVRDE produced "Kestrel" based on the same Piranha design, be air portable ?
Strykers are heavier than the Tracked M113's which Pakistan Army has. While we are not looking for expeditionary capabilities, It would be helpful in MRO and Movement within Theatres.
India has c-17s, they are not overstretched, might as well use them to our advantage.

2. NAMICAs (BMP2's) armed with Nag ATGMs are capable of hitting targets at 4 KM. Why cant we mount the NAG on our new FICV ?

3. The US Marine Corps amphibious LAV-25 is again based on the SWiss Piranha design. So why cant TATA's Kestrel tweak their deign to be amphibious ?


Kana said...

Amphibious, Air Portable, and ATGM capability are all features of current BMP-2.
Why would India pay for development of a LESS capable platform?
How is it absurd to ask the same capabilities as the ancient platform it is replacing?

A pickup truck can fire guided missiles. Not really technically prohibitive.
Amphibious capability is not rocket science, it just means balancing weight/flotation.
If an Abrams tank is air transportable by C-17, that is not a problem for amphibious IFV.
It does mean things like maximum height to fit into loading ramp should be considered.

None of those are technically cutting edge features, it is just a baseline standard.
If you want a simple price based competition, capabilities need to be specified up front.
Otherwise you have dissimilar offers,
and losers complain "I wouldn't have offered what I did had I known you needed XYZ!".
This is the successor to BMP-2 thus it's capabilities are expected to meet & exceed BMP-2.
Indian MoD has enough problems with managing tenders.
Please do not encourage them to drop specifications of basic performance capabilities.

Anonymous said...

@ Alok Asthana

Why is it ridiculous for an Indian built FICV to be amphibious and air-portable; and to fire anti-tank guided missiles that can destroy enemy tanks 4 kilometres away. Are you doubting the capability of the engineering capability of Industrial powerhouses like the TATAs? They already have the knowhow (they demonstrated a wheeled APC a few years back , made in collaboration with DRDO no less !).
Please learn not to comment on the capabilities of the companies you know nothing about - and have faith in the indigenous manufacturers to deliver. The private industry has grown by leaps and bounds and this is a good platform as any to showcase their capability and acumen.

Alok Asthana said...

Agreed, that it might be possible for Indian industry to deliver that, though am uneasy about 'destroy enemy tanks 4 kilometres away'. Too vague. However, do also read the second part of my post i.e. WHY do we need it? Am unable to find a scenario where it would be critical that most of the mech Inf of India must be airlifted and then be used in an amphibious role in an armour heavy environment, where it has to rely on integral capability to repel enemy armour. Of course, it would be great to have this but is it critical and unavoidable? All a question of money and priorities.
And @ Annoymous - I'd treat you with more respect if you do not hide your real name. Just makes everything suspicious.

Anonymous said...

You mentioned competition , where are their FICV prototypes. We have the TATA kestrel running for quite some times.
It would be interesting yo see their photos and reviews.