Setback for private defence industry. The future of the Future ICV project looks gloomy

MoD might re-tender ambitious Future Infantry Combat Vehicle project, 2 years after calling for and getting bids

By Ajai Shukla

Business Standard, 22nd Oct 12

The private sector’s much tom-tommed opening into defence production, via the Future Infantry Combat Vehicle (FICV), intended to replace the army’s 2,600 BMP-2s at an estimated cost of Rs 50,000 crore, faces an uncertain future. The defence ministry (MoD) is contemplating scrapping the current tender and restarting anew. This comes after sitting for two years on the FICV proposals from three private sector consortia and one public sector entity.

In early 2010, the MoD invited Tata Motors, the Mahindra Group, Larsen & Toubro and the MoD-owned Ordnance Factory Board (OFB) to submit proposals to develop an FICV, a lightly armoured vehicle that carries infantry into battle alongside tank columns. After evaluating the four proposals, the MoD was to short-list two “development partners” who would then compete to develop a prototype each. The better of the two would be selected for the army.

But the MoD’s Acquisitions Wing, which must make the short list, now complains that the tender (called an Expression of Interest, or EoI) did not define the criteria by which the winners would be selected. It wants a fresh EoI to be issued, with the criteria specified.

The wing cites the Defence Procurement Procedure (DPP) of 2008, where Para 22 of the “Make” category, covering the FICV project, says: “The EoI should also lay down the broad parameters of the evaluation process and acceptance criterion for the system under development.”

But the MoD brass realises that cancelling the EoI (drawn up in the ministry) and going back to 2010 would involve a serious loss of credibility. Besides, the “Make” category itself outlines the acceptance criteria, specifying that, “the contribution of the Indian industry in the critical technology areas should be the key criterion in assessment of various proposals.”

The three private sector companies worry that restarting afresh would result in the loss of at least 18 months to two years, as the MoD prepares a new EoI and then goes through a fresh evaluation process. Meanwhile, the project teams the proposed vendors have set up for the project would continue to bleed money.

“We have already spent about Rs 28 crores on the FICV project. Now we will have to evaluate our options to see how this programme is going to roll out. It has already been delayed by two years and we foresee at least another year’s delay,” says Brigadier (Retired) Khutab Hai, who heads the Mahindra Group’s defence business.

The “Make” category of the DPP lays down the procedure for Indian industry to develop “high technology, complex systems”, in order to “ensure Indigenous Research, Design, Development and Production of capabilities sought by the Armed Forces.”

It also mandates that the MoD will fund 80% of the cost of developing each of the two FICV prototypes, while the short-listed vendors will pay 20% each. While the cost of developing and manufacturing 2600 FICVs can only be roughly estimated, senior executives from two of the competing companies estimate that the bill would add up to about Rs 50,000 crores. This makes it India’s biggest-ever indigenous project.

According to the EoI, reviewed by Business Standard, the FICV has been conceived as a multi-role platform that must perform three roles. Firstly, it must be a battle-taxi that provides “mobility in battle for infantry, so that it can keep pace with armour.” Secondly, it must “(p)rovide fire-support to the assaulting/dismounted infantry,” i.e. spray the enemy with machine gun and cannon fire as the dismounted infantrymen charge at them. Thirdly, and most ambitiously, the FICV should hold its own on the mechanised battlefield, even against much more heavily armed tanks. According to the specifications, the FICV should “destroy enemy tanks, infantry or fortifications in conjunction with armour or independently.”

The FICV must also have “adequate amphibious capability for crossing of water obstacles like canals, rivers and stretches of sea”; and be “air portable” (i.e. in a transport aircraft’s cargo hold, or slung under a helicopter with chains). Its firepower must include a “fire-and-forget” third generation missile, a cannon and machine guns, which are operated through a “digital fully integrated fire control system with state of the art sensors and all weather surveillance devices.”

This would allow the FICV to destroy enemy tanks more than 4 kilometres away, well before the tank can engage the FICV with its main gun. The EoI also demands the capability to destroy “attack helicopters and low flying fixed wing aircraft.”