Howitzer Deal in Quandary After Price Hike
India has told the US that in view of the price increase, it cannot go ahead with the procurement of 145 ultra-light howitzers for the Army, which plans to deploy such artillery guns in mountainous terrain.
During talks with US officials at the time of American Defence Secretary Chuck Hagel's recent visit, it was conveyed by India that it cannot go ahead with the deal due to the price hike asked for by the equipment manufacturer, Defence Ministry sources said here.
Till early 2013, the deal for the M777 howitzers was expected to cost India around Rs 3,600 crore but due to the delay in finalising the deal, the American side sought an increase of over Rs 300 crore in August last year.
The sources said the US side has conveyed that the production line of the howitzers has been closed down and India will have to pay for its reopening and the costs may escalate further if there are more delays in finalising the deal.
Under the procurement process, certain procedures have to be followed and it is difficult to justify a price hike in the middle of negotiations for the contract, they said.
Recently, Defence Minister Arun Jaitley had stated that the deal has not progressed due to issues over cost of the deal and offsets requirements.
"The case for procurement of the ULH guns through the US government has not progressed due to cost issues and because the vendor has not been able to come up with a proposal fully compliant to the offset requirements," he had said.
India and the US have been discussing the deal for the last several years to induct the howitzers into the Army, which has not bought a single artillery gun in the last 25 years.
The guns were planned to be bought from the US for deployment in high-altitude frontiers along with China and Pakistan and were also expected to be part of the newly raised 17 Mountain Strike Corps of the Army.
The Defence Acquisition Council (DAC) had in February asked the Army to review the plan for procurement of these guns in view of the increased price of the deal as the equipment manufacturers have hiked the cost of the proposed contract.
The offsets proposal offered by the US firm was also not in line with the DAC benchmark, the sources said.
The Army has been waiting for induction of a new artillery gun since 1980s after the Bofors gun scandal.
The Ordnance Factory Board and Defence Resarch and Development Organisation (DRDO) are also working towards developing indigenous guns for meeting the requirements of the Army.
FROM OUTLOOKDefenceWith service chiefs increasingly at the mercy of bureaucrats and dwindling budgets, the country's defence preparedness needs to...more from outlook>>>
FROM THE WEBOpinionTom Engelhardt addresses the graduates of 2016 fromore from WEB>>>
FROM WIREST V Parasuram Washington, July 23 (PTI) Diffemore from WIRES>>>
- One Dead, Two Injured in Germany Machete Attack: Police
- Nepal in Fresh Political Turmoil as PM Oli Resigns
- Want Emotional Relationship With People of Kashmir: Rajnath Singh
- Wrestler Narsingh Fails Dope Test, Rio Participation Doubtful
- Toll in Kashmir Unrest Climbs to 47, Curfew Continues in Five Districts
- AAP MLA Arrested for Trying to Murder Woman His House in Southeast Delhi
- As If Donald Trump Wasn't Enough!
- Daily Curator: Why Cockroach Milk Is Good For You
- Daily Curator: Emergency For Media In Kashmir
- Daily Curator: Oh Non! #NiceAttack
- Has TV News Given Up The Ghost On Kashmir?
- Daily Curator: Gujarat Police Reopens The Ghost of Godhra
- Boris Johnson Claims India Owes UK Multi-Million Pounds
- India's First Green Rail Corridor Launched in TN
- Munich Gunman Planned Attack for a Year, Chose Victims Randomly
- Dancing, Drugs, Extremism: Multiple Lives of Nice Attacker
- Young Woman, Son Crushed to Death in WB, Mob Erupts in Violence
- IOC Decides Against Blanket Doping Ban for Russia
- MOST VIEWED
- MOST COMMENTED