Elbit offers to build 70% of 155 mm artillery gun in India; at about half the cost of the indigenous ATAGS - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Thursday 10 December 2020

Elbit offers to build 70% of 155 mm artillery gun in India; at about half the cost of the indigenous ATAGS

By Ajai Shukla

Business Standard, 9 December 20


After quoting far cheaper than French gunmaker Nexter in a government tender to supply the Indian Army with 1,580 artillery guns, Israeli firm Elbit Systems has written to Defence Minister Rajnath Singh, sweetening its offer by promising to build 70 per cent of the weapon in India.


That is significantly higher indigenisation than the 50 per cent required for “Make in India” projects.


The Ministry of Defence (MoD) tender requires Elbit Systems to supply the first 400 of its ATHOS 155 mm, 52-calibre towed artillery guns in fully built or knocked-down condition, with no indigenisation requirements. The remaining 1,180 guns, which the Ordnance Factory Board (OFB) has to manufacture with transfer of technology (ToT) from Elbit, must be at least 50 per cent made in India.


Elbit’s letter, which Business Standard has reviewed, far exceeds that requirement. “We would like to confirm that Elbit Systems is committed to manufacture the ATHOS towed gun system in India, strictly and in full compliance of the ‘Make in India’ policy, with 70 per cent indigenisation (Indian value) within the contract of the first 400 towed guns,” it says.


For indigenising the first 400 ATHOS guns, Elbit has partnered the Pune-based Kalyani Group and its flagship, Bharat Forge. Once production of the Indian Army’s next 1,180 guns shifts to the OFB, Elbit and the Kalyani Group intend to continue building ATHOS guns together for the global market.


“We will take the required actions to brand the ATHOS as an Indian towed gun system, fully manufactured in India. Elbit is also committed to use its Global Supply Chains for export of the fully indigenous ATHOS gun, produced, assembled and tested in India to other countries around the globe,” states the letter, signed by Elbit’s vice-president, Yehuda Vered.


In addition to full ToT to enable OFB to build 1,180 guns, Elbit writes it has taken “very decisive, firm and committed steps” to partner Indian companies to indigenise the first 400 guns. These include establishing a joint venture (JV) with Bharat Forge called BF Elbit Advanced Systems Private Ltd; and a JV with Alpha Design Technologies called Alpha ELSEC Private Ltd. “Elbit Systems is also in the process of concluding a JV with Aditya Precitech Private Ltd, Hyderabad,” writes Elbit.


In its response to the MoD’s tender, Elbit System’s ATHOS gun turned out to be priced a whopping 40 per cent cheaper than the Nexter gun. Elbit quoted €477 million for 400 guns, compared to €776 million quoted by Nexter, say sources privy to the tender process.


That means each ATHOS gun is priced at €1.2 million (~10.7 crore per piece), while Nexter’s would cost €1.94 million or ~17.3 crore per piece.


At that price, the ATHOS is barely half the cost of the indigenously designed, developed and manufactured Advanced Towed Artillery Gun System (ATAGS), which is estimated to be priced at close to ~20 crore per piece.


Perhaps for this reason, the MoD has kept the door open for importing the ATHOS, while the Defence R&D Organisation (DRDO) continues with trials of the ATAGS, which it is developing in public-private partnership with Bharat Forge and the Tata Group.


Business Standard had reported (November 30, Artillery import embargo put off, doors open for ~23,700 cr Israeli guns) that the MoD — which had earlier embargoed the import of all 155 mm, 52-calibre towed artillery guns from December 31, 2020 — reversed course on August 21 and permitted imports for another year, that is till December 31, 2021.


Buying 155 mm artillery for the army has proved extremely difficult since the controversial Bofors FH77B procurement in the late 1980s. Since these heavy guns proved to be a battle-winning weapon in the 1999 Kargil War, successive governments have tried in vain to conclude a contract for buying more. However, the reverberations of the Bofors scandal ensured that successive procurement attempts came to nought.


A breakthrough came only in March 2019, after three years of exhaustive trials, when Elbit’s ATHOS gun was declared the “preferred supplier/vendor” — the MoD’s terminology for the lowest qualified bidder (L-1).


However, a contract is still to be concluded. MoD sources say there is concern within the defence establishment that the low cost of the ATHOS might render the procurement of the indigenous ATAGS problematic later. Both of them are 155 mm, 52-calibre towed artillery guns but ATHOS’ cost is far lower.


There are also lower calibre guns under procurement, including the 155 mm, 39-calibre ultralight howitzer, of which 145 pieces are being procured from BAE Systems Inc. Besides that, the OFB is building 140 pieces of the Dhanush 155 mm, 45-calibre gun, which it has developed from the blueprints of the Bofors FH77B howitzer.


  1. Brig Indet Mohan Singh10 December 2020 at 05:20

    This is the way forward. Cost, quality, Make in India and above all the operational requirements will be fully met. The savings of over Rs 14000 crore for 1580 guns vis a vis ATAGS has never been achieved in any defence project in the country. Plus it keeps the OFB as a going concern and help it absorb modern technology and also opens the route for the private sector.

  2. This is the way forward. Cost wise a saving of Rs 14000 crore over the ATAGS, keeps OFB lines running, private sector a stake holder and above all meets the operational requirement of artillery which has waited for a long period. Brig Inder Mohan Singh.

  3. # israel had excellent relations with china, and vice versa. "China's status as a potential world power has prompted Israel to maintain closer ties with China by integrating China's global influence with Israel's economic management and its regional strategic importance in the Middle East. Beijing has appreciated Israel's political stability and diplomatic ingenuity and sees the Jewish state as one of the regional pillars for securing China's influence in the Middle East and the entire world."..."China is one of the few countries in the world to concurrently maintain warm relations with Israel, Palestine, and the Muslim world at large."..."China and Israel have developed close strategic military links with each other. Bilateral military relations have evolved from an initial Chinese policy of secret non-official ties to a close strategic partnership with the modern and militarily powerful Israel.[15] Israel and China began extensive military cooperation as early as the 1980s, even though no formal diplomatic relations existed. Israel has provided China with military assistance, expertise and technology. According to a report from the United States-China Economic and Security Review Commission, "Israel ranks second only to Russia as a weapons system provider to China and as a conduit for sophisticated cutting edge military technology, followed by France and Germany." Long before diplomatic relations were established in 1992 Israel had been selling arms to China." ...."israel was ready to sell China the Phalcon, an Israeli airborne early-warning radar system (AWACS), until the United States forced it to cancel the deal. Some estimate that Israel sold arms worth US$4 billion to China in this period.China had looked to Israel for the arms and military technology it could not acquire from the United States, Europe and Russia."..."China is one of Israel's closest economic allies in East Asia where both countries have placed considerable importance on maintaining a strategic and supportive economic relationship. The economic synergy has served the two respective countries greatly where Israel's global technological prowess combined with China's global economic influence, industrial manufacturing capabilities, and marketing expertise made cooperation between the two nations inevitable."
    similarly israel has excellent relations with pakistan. mossad has been using ISI for decades as a bridgehead into OIC, the saudis, the emirates, etc.
    when push comes to shove israel is not likely to compromise its assets and relationships to stand shoulder to shoulder with new delhi.
    the elbit model is a simple one; to sell the equipment at cost, or even below cost and then make a killing in service, maintenance, spares etc. the guns will come in CKD, why would anyone want to crate and ship 155mm howitzers assembled, ready to fire. they will be put together by our people. ready for photos, videos, and the republic day processions. so far, so good. many times more than the initial capital cost will be the service, maintenance, spares. with this they will have got us by the short and curlies.

  4. More imports when local options are ready. Even if lol cal option is expensive, it should be preferred.

  5. Brig Inder Mohan Singh,
    Assembly is not make in India. Strategic independence is the way forward. Build the talent to design artillery systems,the talent to establish a new gun production line -not assemble foreign developed ones... we could earn more by selling the indigenous product to other countries tries. Employee people. Not depend on foreign supplies to fight a war. More easily Hide how many guns we really built if it is a true indigenous system...

    It is a sad state of affairs when people without an ounce of vision are promoted to one star generals.

  6. ATAGS is way too heavy. If you go by what Army says about Arjun, ATAGS could be good in the plains .
    The savings and ability of ATHOS means, we should go in for after complete localisation using TATA, Kalyani factories.
    It also makes sense to have large number of truck mounted artillery based on ATHOS. So 814 mounted + 400 towed will be a good number for ATHOS.
    We should target 2028 to complete artillery modernisation pending since 1999.

  7. What about Bharat 52 of Kalyani systems? Bharat 52 is 100% made in India. How does it compare with Elbit-Kalyani ATHOS?

  8. The price being quoted that it will be half the cost compared to indigenous guns is a mirage. Simply because once they want to build the rest of the guns after the first 400 pieces, the cost will increase invariably because they will have to build two setups from scratch. There is no way the cost will be half at that point of time. This is a half truth being told by omission.

  9. It's happening over the years, when you build capabilities to design and build your own weapon platform, someone comes with an offer, saying that we will supply with 50% of your own production cost. We have seen enough of such offers. They provide only the hardware, but not the software / technology to you to have a full control of the weapon. Neither you have the indipendent rights over modifications and supply to the third country. Israel offer is to derail your own weapon with full control.
    They are hear for the business n make money by making you dependent on them for ever for sustainability.


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