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Rs 8,000-cr artillery gun tender may fail again

Ajai Shukla  |  New Delhi 

CBI continues to probe Singapore Technologies Kinetic, one of the two companies vying to sell India a modern 155-millimetre towed howitzer, even though no charges have been brought against STK after 18 months of investigation

After eight years of tenders and trials, the army’s search for an artillery gun — its most critical weakness — remains mired in uncertainty. The Central Bureau of Investigation (CBI) continues to probe Singapore Technologies Kinetic (STK), one of the two companies vying to sell India a modern 155-millimetre towed howitzer, even though no charges have been brought against STK after 18 months of investigation. And with the CBI recommending the formal blacklisting of STK, its rival — UK-headquartered BAE Systems, in partnership with the Mahindras — fears that the tender might be scrapped and the process begun anew.

Brigadier Khutab Hai, CEO of the Mahindra Group’s Defence Land Systems India — which will manufacture some 55 per cent of BAE Systems’ FH-77B-05 howitzer if it is chosen for the Indian Army — told Business Standard, “If STK is blacklisted, I apprehend that the Ministry of Defence (MoD) might entirely scrap the tender for towed howitzers, on the grounds that there is now just a single vendor. But remember, three companies had bid in this tender: Rheinmetall, STK and BAE Systems. Even if the other two are eliminated for various reasons, this was never a single vendor situation.”

German gun maker, Rheinmetall, had been eliminated after the MoD had discovered, during technical evaluation of the bids, that it was partnering banned South African company, Denel. STK ran into problems with the May 2009 arrest of Sudipta Ghosh, former chairman of India’s Ordnance Factories Board (OFB), for allegedly demanding and accepting illegal gratification from foreign companies, including STK. And BAE Systems itself is in a delicate position: its FH-77B-05 howitzer is built by Bofors, which is now a part of BAE Systems after a series of mergers and takeovers.

At stake in this tender, which was issued in 2008, is an order worth $1.8 billion (Rs 8,000 crore) for the outright supply of 400 towed guns; and the licensed production in India of another 1,180 guns. If the MoD imposes even the minimum offset requirement of 30 per cent, that would translate into $540 million (Rs 2,400 crore) worth of manufacture within India.

MoD sources said that, if a fresh tender were to be issued today, at least two other guns — one Russian and the other Slovak — would enter the fray.

For now, both guns in the fray — STK’s Indian Field Howitzer-2000, or IFH-2000; and the BAE Systems FH-77-05 — are in the Pokhran Field Firing Ranges, in Rajasthan, for trials. Despite its ban on STK, the MoD has allowed the IFH-2000 to participate in trials, with the award of any contract being conditional on the CBI clearing STK’s name.

The hot-weather trials, which were to begin in May, have been progressively delayed since STK has requested for time to calibrate its gun with the Indian ammunition that will be used in the trials. In February, the trials had been postponed to May after the STK IFH-2000 had met with an accident while being loaded on an aircraft for transportation to India.

Despite not having filed a charge sheet against STK, the CBI insists it has strong evidence. On June 30, while charge-sheeting Ghosh, the CBI announced that a “Letter Rogatory (an official questionnaire for obtaining evidence in trans-national investigations) has been issued by the Special Judge, CBI, Kolkata, to the Central Authority in the Republic of Singapore. The said Letter Rogatory is pending execution.”

The CEO of STK, Brigadier General Patrick Choy, said, “STK has, from the beginning, cooperated fully with the investigation. When requested by the CBI last year, I came to Delhi and answered their questions. Last year, we invited the CBI to Singapore for an investigation, and to audit our books if they liked. That offer still holds.”

The Indian Army’s artillery modernisation plan has remained stalled, for various reasons, for over two decades. The army’s 180-odd artillery gun regiments — each having 18 guns — have not received any new weaponry since the Bofors gun was bought in the late 1980s.

The selection of a suitable 155 mm, 52-calibre towed howitzer to fill this gap began in summer 2002, when the MoD began evaluating three guns from BAE Systems; Israeli firm, Soltam; and Denel. Five rounds of trials, conducted in 2002, 2003, 2004 and 2006, reached no conclusion: while Denel was blacklisted for corruption in September 2005; the other two guns did not meet the army’s standards. Following this failure, the current tender was issued in 2008.


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First Published: Thu, July 15 2010. 13:24 IST