Indian industry at landmark defence tender - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Sunday 8 August 2010

Indian industry at landmark defence tender

An Indian Army BMP-2 Sarath Infantry Combat Vehicle (ICV), which equips its mechanized infantry battalions; and its recce & support battalions. The FICV will replace the BMP-2 Sarath

Companies to compete, US-style, to develop armoured carriers for army

By Ajai Shukla
Business Standard, 9th Aug 01

India’s defence industry is poised at a landmark. On the 25th of August, four Indian companies --- three private and one public --- will submit bids in the MoD’s first-ever “Indian industry only” competition to develop a high-tech weapon system for the defence forces.

The four companies --- Tata Motors; the Mahindra Group; L&T; and the MoD-owned Ordnance Factory Board (OFB) --- are competing to design and build 2600 new-generation Future Infantry Combat Vehicles (F-ICVs) to replace the Indian Army’s aging fleet of Russian-designed BMP-IIs. In an American-style showdown, two of these vendors will be nominated to develop a prototype each and the winning design selected for the F-ICV.

While the cost of developing and manufacturing 2600 FICVs can only be roughly estimated, senior executives from two of the competing companies say that the bill could add up to Rs 50,000 crores. This will make it India’s most expensive defence contract so far.

Infantry Combat Vehicles (ICVs) are lightly armoured, highly mobile, tracked vehicles that look like small tanks. Travelling deep into enemy territory alongside tank columns, each ICV carries 7-8 infantry soldiers. These jawans, once dismounted, physically occupy and defend captured territory until the slower-moving infantry divisions can catch up with the strike formations.

The MoD will fund 80% of the cost of developing the FICV; the selected contractor will pay just 20%. It has been mandated that the FICV must have an indigenous content of at least 50%. With a development time of 7-8 years, the FICV should be ready by 2018.

This indigenous development of an FICV has been enabled by the Defence Procurement Procedure of 2008 (DPP-2008), which lays down a “Make” procedure for developing “high-tech, complex systems” through Indian industry. Following this procedure, the MoD surveyed private and public industry to zero in on potential contractors. The four companies identified were then issued with an Expression of Interest (EoI), which listed out the capabilities that the army expected from the FICV. Sources familiar with the EoI say that the FICV will be operated by 3 crewmembers, and carry 7 additional soldiers with combat loads; it must provide protection from bullets fired by 14.5 millimetre calibre weapons; it must be amphibious, i.e. capable of floating in water; it must be air-transportable, which would imply a maximum weight of 18-20 tonnes; and it must have a cannon and be capable of firing anti-tank missiles.

In their responses to the EoI on 25th August, each of the four competitors will detail their proposal for developing the FICV; the key project milestones; the estimated capital expenditure; the technology they will include and how that will be developed or purchased; and the minimum order that they would need to set up a financially viable production line.

Those responses will be evaluated by the MoD’s Integrated Project Management Team (IPMT), which will select two contractors. Over a fixed number of years the two contractors will develop their respective FICV prototypes. The Indian Army will select the better of the two by carrying out field trials.

But this is not a winner-take-all competition. Since the MoD wants to retain two production lines, the winner will be given 65-70% of the order; the runner-up will build 30-35% of the army’s requirement of FICVs, provided that company agrees to build the winning design at the same cost as the winner.

With two assembly lines operating, India’s private defence players expect that the FICV contract will create an eco-system of suppliers extending far beyond the winner of the contract. Brig Khutab Hai, who heads the Mahindra Group’s defence business, says, “The FICV project will be a huge boost to the Indian defence industry in R&D, manufacture, and in developing Tier-1 and Tier-2 suppliers from the small and medium sector industries.”

This MoD attempt to harness private contractors is backstopped by the public sector: the Defence R&D Organisation (DRDO) believes that it will be approached for key technologies; and the Ordnance Factory Board (OFB), which manufactures the BMP-II at Medak, in Andhra Pradesh, for production assistance.

At least two of the private contractors believe that it would be wasteful to set up a Greenfield production line. Says a senior executive in one of the contending companies, “Ordnance Factory, Medak is a national asset and it would be lying idle at that time. We could build the FICV at Medak --- on a Government-Owned-Company-Operated (GOCO) basis --- instead of setting up a brand new facility.”


  1. ajai, are there any plans for cheaper wheeled APC's as well ? the Sundarji plan called for widespread mechanisation of the army, doing it with tracked ICV/APC's is not affordable.

  2. What about the Abhay ICV. It can start production until the new ICV arrives. Atleast it can replace the BMP-1's in service.


  4. Damn!. Now we have it. IAS Baboos are going to be doing Program Management for something as complex as a weapon system development.

    It used to be the case that there was nothing in the world that a Prussian Army officer with his Rules Book couldn't accomplish.

    The IAS Baboos are the modern day Prussian Army officer. With his rules book and his thicket of red tape there is nothing he can't do. From developing battle tanks and infantry combat vehicles to running to designing and building cities to being "collectors" in districts to running airports to cleaning toilets ,running telelphone networks anything you can think of and if you can name it, there is nothing the Baboo cannot do.

    The day the Baboo is sent home and people who actually know what they are doing being allowed to run things will there be anything resembling sanity in this country. Today clueless mantris with bumbling baboos as underlings run the show.

  5. This is not the first ever "Indian industry only" competition, Ajai. The Navy's autonomous underwater vehicle competition precedes this. See Shiv Aroor's blogpost on it here.

  6. A step well taken albeit a bit too late. It makes me happy that we are finally making something on our own rather than squandering it on expensive foreign maal. It is also a sad state that we have not being able to develop even a troop carrier for the last 50 years.

  7. I bet my money on the public sector company winning regardless of the results of the competition. they will just pressure the government into winning the competition. we've seen it numerous times with the atgms and night vision equipment to communication equipment.

    mr. shukla could you please write an article evaluating the likelihood of the public sector winning solely based on pressuring the government? an opinion based article this outcome?

    great articles top notch as always

  8. the idea should be that they get 4 companies to bash their collective heads against this problem, have all agree on the outline of the vehicle and then let them each tackle one specific module where they have the most applicable technology, this will allow for the fostering of component/system specific manufacturers who can then retrofit these system to legacy vehicles or upgrade them for future vehicles while all the time developing the core competency to do and building up a specific knowledge base.

    this is a version of the sort of approach Israel takes, their weaponsystems are outlined by the army/af/navy and then the industries develop specific modules of the system. the upside is that they become excellent integration engineers.

  9. Good news. Hopefully a private sector is favoured this time and we start building up our Defence "Chaebols"

  10. I can bet OFB will "win" the contract, just as a HAL/BEL won a similar contract to make UAVs when it was competing against the pvt sector.

    Remember that?

    Some PSU dude will want to make a quick buck and will make sure the contract swings his way.

    Hey anon@9 August 2010 09:35 .. stop trying to criticize everything ajai writes. You bharat-ratshakers are all the same. You people keep coming here and whine about how ajai should do this and not do that etc etc. I've seen your threads which go on and on complaining how "immature" and "moronic" ajai is. All you people are is a bunch of arm-chair judges with little or no knowledge of the real world. And yet you go on as if you know it all. And yet you people have the nerve to come here and post, in addition to using his articles to stimulate debates at the ratshakers forum. So my advice is, go home RATshaker!

  11. Simranjit Singh9 August 2010 at 05:00

    Thanks for the news Ajai Sir...

    You write :
    The Defence R&D Organisation (DRDO) believes that it will be approached for key technologies

    I have one question..
    Where does DRDO fit in all of this ??
    They are not the lead designers. Right ??
    DRDO is the prime developer/integrator & whichever company wins the contract, they will have to work with DRDO ??

    Because if we go by the experience then what experience Tata, Mahindra has in building ICV's....

    They only have tie ups with foreign companies like BAE & they will do nothing more than it will technically be a foreign product.

    Please explain this....


  12. Gentlemen I think the Indian Industry is poised now to grow into a strong force not only by means of growing incomes ,but by being chief provider of arms & Equipment to our brave Armed Forces.
    Thanks to the guys(Brains) behind the Idea of opening the Defence R&D and Production sector to the Indian Private Industries who have won laurels Globally for Best Practices.
    Let's be positive & Hope for the best for the Armed Forces & India at large.

  13. OFB-DRDO will win the contract. Army then will frame ridiculous GSQRS and the product will fail on trials. The Russians will sell us BMP-2 calling it BMP-2020 and pricing it ten times the indigenous solution.

  14. @Danish,
    Yes I agree with you. But lets see where it goes. I fear that it will go to Public Sector.
    But seems a good plan, very good thinking by MOD. I hope they will come up with more and more innovative things like this

  15. Anonymous 07:30

    There are no plans for a cheap wheeled APC


    The four companies I named are the prime contractors for the project. They are at liberty to go to anyone in the world for designs and technology... provided that 50% of the FICV remains Indian.

    Those are the conditions of the "Make" procedure.

    The DRDO will surely be contributing some technologies, regardless of who is selected as prime


    Your love for the DRDO's Abhay is truly patriotic. I can hear the violins playing faintly in the background. But, let's remember, the Abhay is just barely a current generation ICV. It is definitely not the "Future ICV" that the Indian Army is hoping to get.

  16. Abhay is supposed to be a pre-technology demonstrator to develop and test technologies that will be used on a futuristic ICV (FICV), which will replace the Indian Army's BMP-2

    So this defense tender is truly a landmark tender.

  17. Is it just me, or does 50% look like a low bar?

    Also, is it 50% by weight?

  18. Well, it certainly makes me proud that my brother is working on this project for one of the pvt sector companies. I will tell him to go through your blog in his spare time.

    - Manne

  19. One look at the previous census report reveals the likely scenario for some of futuristic employment of BMPs. India is developing by Cities and Towns. These are the emerging economic and population centers of India. In near future, they might hold half the population.

    Considering above, these towns and cities will present the biggest security challenges internally, including problems of terrorism.

    How would one employ the tracked BMPs there, is not understood. Or the BMPs will sit out as always?

    Similarly, why can't half of the BMPs be wheeled? That may also reduce mobilization problems.

    besides these cities, the future of these BMPs lies in Plateau, mountains and riverine terrains. In design, the light gun concept can be given a rethink for BMPs to be able to operate without tanks. Or to operate as light tanks.

    I think some percentages of wheeled BMPs would be necessary. Indian Army must start looking at its possible comitments outside the country when the wheeled version will be more usefull.

  20. Two questions:

    (1) Does the contract expressly call for tracked vehicles?
    (2) Why does air mobility imply 18-20 tonnes of weight? The M2 Bradley is about 30 tonnes and can be carried on the C-17, which India is planning to acquire. Or does it specifically imply C-130 mobility?

  21. this is surely a landmark moment. but perhaps the real need in 2018 would be the wheeled ICVs; and not so much so the tracked ones. what we may ideally need then would be a `drive-able` infantry to meet the sub-conventional and non-traditional threats. it is also time that we learnt to blur the distinction between the mechanised and regular infantry along the western front.


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