Private players cry foul as HAL submits 2 bids for mega Navy chopper deal
New Delhi: The Naval Utility Helicopter (NUH), the first defence programme being pursued under the much-touted Strategic Partnership (SP) policy, seems to be flying into rough weather. Indian private industry is stumped by the fact that the state-run Hindustan Aeronautics Limited (HAL) has made two bids, while there are also doubts over one particular platform being preferred by the force.
The Indian Navy has so far received eight responses to the Expression of Interest (EOI) issued in February as part of its plan to purchase 111 helicopters for Rs 21,738 crore, sources in the defence establishment told ThePrint.
Private companies that have submitted the bids include Mahindra, Tata, Reliance, Adani, Bharat Forge and Coimbatore-based Lakshmi Machine Works. Sources say HAL has submitted two bids — one by itself and another through its joint venture with Russian Helicopters to produce the Kamov chopper.
Larsen & Toubro, which had shown initial interest, has not responded to the EOI, which will pave the way for the issuance of a Request for Proposal (RFP).
What is the NUH?
The NUH is set to replace the Chetak of 1960s vintage, and is to be utilised for multiple roles, including search and rescue, casualty evacuation and low-intensity maritime operations, besides torpedo drops.
The Navy felt that with changing security dynamics, more reliable twin-engine choppers were needed, which could carry out limited anti-submarine warfare as well.
The Chetak is a single-engine helicopter and is used only when extremely necessary due to risks of flying it over sea.
Of the 111 helicopters, 95 are to be manufactured in India by the selected Indian partner, while the rest are to be bought off the shelf.
The NUH project envisages a high level of indigenisation, with about 60 per cent of each helicopter to be made in the country.
Concerns of private players
A top official of a private company, who did not wish to be identified, said HAL’s double bid “kills the very basis of Strategic Partnership, which was aimed at creating capabilities in the private sector, over and above the existing capabilities in the public sector”.
Industry watchers said this is the final nail in the Strategic Partnership coffin — the first one was when the MoD went back on the original recommendation of having a Strategic Partnership for one category of weapon systems/platforms. Now, this stands restricted to only one programme at a time.
“Effectively, this has resulted in the SP programme getting converted to ‘Buy and Make’ with an additional restriction, wherein the MoD will make the choice of OEMs (original equipment manufacturers) for Indian vendors,” an industry source said.
Concerns raised by Indian industry include absence of level-playing field with participation of Defence Public Sector Undertakings, which already have the required infrastructure built at government cost, and a feeling that naval requirements have been customised for one particular OEM.
Some OEM officials, on the condition of anonymity, said the model as envisaged is not workable, particularly if the number of shortlisted Indian vendors is less than the available OEMs.
“This can result in arm-twisting by the Indian vendors as they can eliminate one or more OEMs from participation. Even for the MoD, it will be disastrous as it will result in sub-optimal competition and resultant higher price of acquisition,” a source said.
Sources said that after the elections, it is possible that the Strategic Partnership policy might go in for a full review to make it more workable.
HAL’s NUH variant and lack of platforms
HAL had put on display its variant of NUH at the Aero India Expo in February. However, sources at the Naval Headquarters said the helicopter does not have foldable blades, a basic requirement of naval helicopters.
Sources said HAL is already working on foldable blades, and will present the option soon to the Navy. And if an indigenous option like HAL is available, sources said the defence ministry would need to go for the Buy IDDM (indigenously designed, developed and manufactures) classification, which is accorded highest priority under the Defence Procurement Procedure.
Even if the programme was to be pursued under Strategic Partnership, the lack of available platforms internationally may lead to a single bid situation, sources said.
Of the international OEMs, Leonardo is currently blacklisted. The Russians are also in the race, but the Navy doesn’t seem too keen on the Kamov choppers. Bell Helicopter’s Bell 429 and Sikorsky’s S-76 have certain non-compliance issues with respect to the Navy’s specific requirements. The companies could carry out changes, but this would involve expenditure.
The front-runner seems to be Airbus, which is trying to push AS565, a platform that’s more than 30 years old.
OEMs have a deadline of 15 May to respond to the EOI issued to them.
