Decision on Second Defence Negative Import List Expected Next Week

Defence Industry, Top Stories

New Delhi: The meeting to review and clear the decision on the second defence negative import list is now expected next week. According to the sources in the defence establishment, the list has been submitted but a physical meeting has not taken place due to the second wave of the Covid-19 pandemic.

The second defence negative import list decision will clear the air on the 155mm x 52 caliber towed artillery gun. It may be noted that the artillery gun was there in the first negative list released on August 09, 2020, and the embargo was to kick in from December 2020. Subsequently the date was changed to December 2021.

The Ministry of Defence, nearly 14 years ago, had cleared the proposal for a towed artillery gun system under the ‘Buy and Make’ category that was meant to be the backbone of India’s fire assault. A final decision on this is still awaited and eyes are on whether the cut-off date will remain or extended again.

Earlier, the reason for extending the date was that while the indigenous Advanced Towed Artillery Gun System (ATAGS) is being built, a separate process is also on to get similar guns from the global market and making them in the country under the ‘Make in India’ initiative.

This race was primarily between Israel’s Elbit Systems and France’s Nexter, and Elbit’s Autonomous Towed Howitzer Ordnance System (ATHOS) emerged the winner. In March 2019, following the exhaustive ‘Field Trial Cum Evaluation Process’ spread over several years, with several ups and downs, Elbit Systems was declared the lowest bidder (L1).

The process for acquiring towed guns began in 2001 as part of the Army’s Field Artillery Rationalisation Plan, which had been drawn up in 1999. Multiple requests for proposal (RFPs) were issued. In the last RFP, which was issued under the UPA government, only the two companies mentioned above participated, sources said.

The deal was for the supply of 400 guns and indigenous production of the remainder 1,180 guns by Ordnance Factory Board (OFB), under a full Transfer of Technology (TOT) process.

Sources in the defence establishment said the price of Elbit Systems’ ATHOS was lower by 40 per cent compared to the price of its competitor — Nexter’s Trajan gun. Sources in know of the bidding process said the cost per gun, which weighs less than 15 tonnes and has a fully automatic loading system, put forward by Elbit was less than Rs 11 crore per piece. This is also significantly lower than the estimated cost of the ATAGS, which is said to be anywhere between Rs 16-18 crore.

A final decision is pending though the cost negotiation process has been completed. In December last year, the Israeli government also wrote a letter to Defence Minister Rajnath Singh to push for this deal. Earlier last year, the Israeli firm also wrote to the Indian defence authorities, stating that in case they prefer to acquire only the first 400 towed guns, the related cost corresponding to TOT can be deducted from the total contract price.

In the letter, Elbit Systems had offered the TOT for the future 1,180 guns as an option for India, at the same cost as mentioned in the commercial offer made. Elbit also said it has finalised the approach and strategy to achieve 70 per cent indigenisation within the contract of the first 400 towed guns, starting from the first guns.

The company’s argument was that the ATHOS is tailored to the special requirements of the Indian Army and it has invested tens of millions of dollars in the design and development of the gun in accordance with Army requirements and in the field trials. The sources said Elbit also promised to supply the guns much earlier than the contract delivery schedule — the first six guns within 10 months from contract signing, and an additional six guns within 14 months.

According to the Israeli firm, all the remaining guns will be delivered according to an accelerated delivery schedule, which will ensure finalisation of the deliveries not later than 54 months from contract signing, instead of the 72 months stipulated in the draft contract.

Elbit in its communications with the Indian defence establishment said that the ATHOS will end up being an indigenous gun — mass produced, assembled and integrated in India and highlighted that it has a joint venture (JV) with Indian firm Bharat Forge. The company said that the technology and design will be fully transferred to the JV and OFB.

However, the Defence Research and Development Organisation (DRDO) has gone on record to oppose any import plans, saying that its ATAGS was better than ATHOS and is the gun of the future.

Bharat Forge, incidentally, is also involved with the ATAGS development along with the Tata Group.

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