The National Democratic Alliance (NDA) government has signalled its intention to provide a defence boost to 'Make in India' by asking two Indian consortia - led respectively by Tata Power (Strategic Engineering Division) and Bharat Electronics (BEL) - to develop a "Battlefield Management System" (BMS). This could generate Rs 40,000-50,000 crore worth of procurement for the army.
On Wednesday, the ministry of defence (MoD) informed BEL and Tata Power SED in writing that the consortia they respectively led had been selected out of four that had given proposals in response to the MoD's tender.
Business Standard had first reported this impending award (February 11, L&T, BEL consortia set to get Rs 40,000 crore project)
The MoD has instructed the consortia - one consisting of BEL and Rolta India, and the other comprising of Tata Power SED and Larsen & Toubro (L&T) - to register "special purpose companies" for this project.
Each of these "development agencies", will separately develop a working BMS. The MoD will reimburse 80 per cent of the development cost.
The Defence Procurement Policy of 2013, which governs this 'Make' project, mandates that a MoD "integrated project management team" (IPMT) will select the better prototype. Both consortia will share the contract to mass-produce the BMS for the army, with more production going to the consortium whose prototype has been chosen.
The BMS consists of a wireless network that links digital devices carried by combat soldiers, interlinking them, their commanders and a range of battlefield sensors. This provides a common battle picture to each individual.
"In (the) next five-seven years, when BMS will be deployed by the army, it will cover more than 70 per cent of soldiers while digitising the tactical battlefield and creating a secure IoT (Internet of Things) for the army," said Tata Power SED in a press release on Thursday that announced this development.
The MoD has moved unusually fast in the BMS contract, which industry sees as evidence of Defence Minister Manohar Parrikar's seriousness in pushing indigenisation. The MoD issued a tender - or expression of interest - in November 2013, to which four consortia responded in April 2014. Since then, it has taken only 10 months to select the winners.
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"My compliments to MoD and army for the speedy decision… It demonstrates our commitment to 'Make in India', stated Rahul Chaudhry, the chief of Tata Power SED.
Tata Power SED and L&T are both emerging as leading private sector defence firms, having also been selected (along with HCL) in the first 'Make' category project, a Rs 10,000-crore Tactical Communications System. This will be a high-bandwidth, mobile, data and voice network that can be rolled out, even in enemy territory during war.
The public sector BEL, too, has been selected as a "development agency" in both these 'Make' acquisitions.
The current 'Make' procedure mandates that 30 per cent of the BMS must be indigenous. Parrikar has publicly expressed dissatisfaction with this percentage, stating that a new 'Make' procedure would stipulate greater indigenisation. It is unclear whether that could be retroactively applied to this 'Make' project.
The MoD has called in representatives of the two consortia to discuss this project on March 4 with the IPMT.