Mega Security Incentives! Rs 43,000 CR submarine project, Rs 6,800 CR worth arms procurement gets government approval

The Defence Ministry on Friday cleared a mega project to domestically build six conventional submarines for the Indian Navy at a cost of around Rs 43,000 crore, in a major decision aimed at significantly boosting India's naval prowess in the face of China rapidly expanding its maritime capabilities.

The submarines will be built under the much-talked-about strategic partnership model that allows domestic defence manufacturers to join hands with leading foreign defence majors to produce high-end military platforms to reduce import dependence.

The Defence Ministry also approved proposals relating to capital acquisitions of various military weapons and equipment worth around Rs 6,800 crore, according to Defence Minister Rajnath Singh's office.

The decisions to approve the naval submarine project named 'P-75 India' and the procurement of the military weapons and equipment were taken at a meeting of the Defence Acquisition Council (DAC) chaired by Singh.

The DAC is the Defence Ministry's highest decision-making body on procurement.

In another important decision, the DAC also extended the timelines for procuring urgent capital acquisitions under the delegated powers to the armed forces up to August 31, 2021, to enable them to complete their emergency procurements.

One of the largest Make in India projects

"This project envisages indigenous construction of six conventional submarines equipped with the state-of-the-art air-independent propulsion system at an estimated cost of Rs 43,000 crore," the ministry said about the naval project.

"This is a landmark approval, being the first case processed under the strategic partnership model. This would be one of the largest 'Make in India' projects and will serve to facilitate faster and more significant absorption of technology and create a tiered industrial ecosystem for submarine construction in India," it said in a statement.

The ministry said the project will help reduce current dependence on imports and gradually ensure greater self-reliance and dependability of supplies from indigenous sources.

"With accord of this approval, the country will be enabled to achieve its 30-year submarine construction programme envisioned by the government to acquire national competence in submarine construction and for the Indian industry to independently design and construct submarines in India," it said.

It said the availability of new technologies and advanced manufacturing capabilities to the industry will be an important step towards enhancing the nation's quest for self-reliance in modern conventional submarine construction

Under the strategic partnership model, domestic defence manufacturers are allowed to join hands with leading foreign defence majors to produce high-end military platforms to reduce import dependence.

Officials said the project will be implemented in a period of around 12 years and the final cost may go up depending on the weapons systems to be incorporated into the stealth submarines.

Sources said the DAC approved the issuance of the Request for Proposal (RFP) or tender to shipbuilder Larsen & Toubro (L&T) and state-owned Mazagaon Docks Ltd (MDL).

Both L&T and MDL will have to respond to the RFP by tying up with one of the five already short-listed foreign shipyards which are Rosoboronexport (Russia), Daewoo (South Korea), ThyssenKrupp Marine Systems (Germany), Navantia (Spain) and Naval Group (France).

It will be for the L&T and MDL to decide about the foreign entity they would like to collaborate for the project.

The RFP is expected to be issued within a month and the contract will be awarded following a detailed evaluation of the response of the L&T and MDL, the sources said.

The groundwork like specifications of submarines and other critical requirements for issuance of the RFP for the mega project has been completed by separate teams of the Defence Ministry and the Indian Navy.

Navy plans to acquire 24 new submarines

The Indian Navy plans to acquire 24 new submarines, including six nuclear attack submarines, to bolster its underwater fighting capability.

It currently has 15 conventional submarines and two nuclear submarines.

The Navy has been focusing on significantly bolstering its overall capabilities in view of China's growing efforts to increase its military presence in the Indian Ocean Region.

The Indian Ocean, considered the backyard of the Indian Navy, is critical to the country's strategic interests.

According to global naval analysts, the Chinese navy currently has over 50 submarines and about 350 ships. The total number of ships and submarines is projected to go past 500 in the next 8-10 years.

The Indian Navy is also in the process of procuring 57 carrier-borne fighter jets, 111 Naval Utility Helicopters (NUH) and 123 multi-role helicopters under the strategic partnership model.

The policy envisages the establishment of long-term strategic partnerships with Indian defence majors through a transparent and competitive process wherein they would tie up with global original equipment manufacturers (OEMs) to seek technology transfers.

Initially, the strategic partners will be selected in four segments - fighter aircraft, helicopters, submarines and armoured fighting vehicles/main battle tanks. It is expected to be expanded to other segments.

In a couple of years, the government has unveiled a series of reform measures and initiatives to make India a hub of defence manufacturing.

Last August, the defence minister had announced that India will stop the import of 101 weapons and military platforms like transport aircraft, light combat helicopters, conventional submarines, cruise missiles and sonar systems by 2024.

A second negative list, putting import restrictions on 108 military weapons and systems such as next-generation corvettes, airborne early warning systems, tank engines and radars, was issued this week.

In May last, the government announced increasing the FDI limit from 49 per cent to 74 per cent under the automatic route in the defence sector.

The Defence Ministry has set a goal of a turnover of Rs 1.75 lakh crore in defence manufacturing in the next five years that included an export target of Rs 35,000 crore worth of military hardware.