Tata, M&M await Rs 3,000-cr Army deal

Announcement of a Rs 500-cr initial order for SUVs likely within weeks

After a three-year wait, the country’s two largest homegrown automobile makers, Tata Motors and Mahindra & Mahindra (M&M), await the Indian Army’s announcement on new sports utility vehicles (SUVs). The choice is between the Tata Safari Storme and the Mahindra Scorpio.

The army, is expected to announce an initial order of about Rs 500 crore for almost 5,000 vehicles in the next few weeks, Business Standard has learnt from industry sources. In all, the order is likely to be worth Rs 3,000 crore for 30,000 SUVs over a 10-year period.

The army, the third-largest standing one in the world, had been using the Maruti Suzuki Gypsy as its general service vehicle. In 2012, however, a new bid was opened for a GSV in the 800kg payload class with a hard top (GS800), so that air-conditioning could be installed — the earlier category was a 500kg payload with a soft top. While about Rs 10 lakh is the target price for the GS 800, both M&M and Tata are expected to meet army officials for final price negotiations.

V S Noronha, Tata Motors’ vice-president for defence and government business, told BS there had been little movement in defence orders over the past 18 months but things had started moving swiftly since Manohar Parrikar was appointed as minister in November last year.

“The order tap now seems to be opened. We have qualified in three tenders, for which between now and March, we expect confirmed orders. Even paramilitary orders have started,” he said.

Pravin Shah, M&M’s chief executive (automotive & international division), said: “We are expecting the orders to come soon. The previous version of the Scorpio has been supplied to the Army since launch in 2002. We will now engage with the price negotiating panel .”

The pre-bid meeting in 2012 saw participation from a little over 10 global automobile majors, including Toyota, Honda, Ford and Nissan. Only the Scorpio and Safari Storme were officially cleared about three months earlier, after various stages. These included technical evaluation and winter/summer trials.

The version of the SUVs offered to the army is expected to be quite different from what is available for civilian consumers. Some creature comforts like leather seating will be absent but the vehicles have seen their suspension strengthened and have an option for bullet-proofing. Additional lights must be added, such as one for blackouts, used when driving in a convoy at night and designed to avoid enemy detection.