• India
  • Jun 05

DAC clears Rs 43,000 crore project to build 6 submarines

The defence ministry cleared a mega project to domestically build six conventional submarines for the Indian Navy at a cost of Rs 43,000 crore in a major decision aimed at significantly boosting the country’s naval prowess.

The Defence Acquisition Council (DAC) approved the issuance of the request for proposal (RFP) or the formal tender for the project which will be the first such procurement under the strategic partnership model that allows domestic firms to collaborate with foreign players to produce high-end military platforms in India.

The DAC, chaired by Defence Minister Rajnath Singh, also approved proposals relating to acquisitions of various military weapons including air defence guns and ammunition for the Indian Army at a cost of around Rs 6,800 crore.

What is the role of Defence Acquisition Council?

• Pursuant to the recommendations made by the group of ministers on reforming the national security system in February 2001, a separate, dedicated structure for defence procurement was set up.

• In continuation of its efforts to streamline defence procurement procedures and to reduce timelines so as to ensure timely delivery of equipment to the armed forces, various measures to simplify the defence procurement procedure have been undertaken.

• A Defence Acquisition Council (DAC) was created as an overarching structure with the defence minister as its chairman.

• The DAC is the highest decision-making body of the defence ministry on procurement.

• The main objective of the DAC is to ensure expeditious procurement of the approved requirements of the armed forces in terms of capabilities sought and time frame prescribed by optimally utilizing the allocated budgetary resources.

Its functions include: 

• Give in principle approval of a 15 years Long Term Integrated Perspective Plan (LTIPP) for defence forces.

• Accord of acceptance of necessity to acquisition proposals. 

• Categorisation of the acquisition proposals relating to ‘Buy’, ‘Buy & Make’ and ‘Make’. 

• Look into issues relating to single vendor clearance. 

• Take decisions regarding ‘offset’ provisions in respect of acquisition proposals above Rs 300 crores.

• Take decisions regarding Transfer of Technology under the ‘Buy & Make’ category of acquisition proposals. 

• Field trial evaluation.

Highlights of mega submarine programme:

• The Indian Navy planned to acquire 24 new submarines, including six nuclear attack submarines, to bolster its underwater fighting capability under a 30-year programme that will end in 2030. It currently has 15 conventional submarines and two nuclear submarines.

• The formal clearance to the mega submarine programme called Project 75-India came two decades after it was mooted and it may take at least 10 years for the first submarine to roll out after the deal is sealed.

• This project envisages indigenous construction of six conventional submarines equipped with the state-of-the-art air independent propulsion system at an estimated cost of Rs 43,000 crore.

• This is a landmark approval, being the first case processed under the strategic partnership model. 

• This would be one of the largest 'Make in India' projects and will serve to facilitate faster and more significant absorption of technology and create a tiered industrial ecosystem for submarine construction in India.

• The project will help reduce current dependence on imports and gradually ensure greater self-reliance and dependability of supplies from indigenous sources.

• With this approval, the country will be enabled to achieve its 30-year submarine construction programme envisioned by the government to acquire national competence in submarine construction and for the Indian industry to independently design and construct submarines in India.

• The availability of new technologies and advanced manufacturing capabilities to the industry will be an important step towards enhancing the nation’s quest for self-reliance in modern conventional submarine construction. 

• This project under the strategic partnership model provides a unique long-term opportunity and planning certainty for the industry to invest and support submarine construction. 

• It will also infuse the latest technology and weaponry for submarines in India through strategic tie-up between Indian industry and leading foreign original equipment manufacturers (OEMs).

• Under the strategic partnership model, domestic defence manufacturers are allowed to join hands with leading foreign defence majors to produce high-end military platforms to reduce import dependence.

• The DAC approved the issuance of the RFP to leading shipbuilder Larsen & Toubro (L&T) and state-owned Mazagaon Docks Ltd (MDL) soon. The L&T and MDL were selected following a long-drawn process. 

• Both L&T and MDL will have to respond to the RFP by tying up with one of the five already short-listed foreign shipyards — Rosoboronexport (Russia), Daewoo (South Korea), ThyssenKrupp Marine Systems (Germany), Navantia (Spain) and Naval Group (France).

• The Navy has been focusing on significantly bolstering its overall capabilities in view of China’s growing efforts to increase its military presence in the Indian Ocean Region.

• The Indian Ocean, considered the backyard of the Indian Navy, is critical to the country’s strategic interests.

• According to global naval analysts, the Chinese navy currently has over 50 submarines and about 350 ships. The total number of ships and submarines is projected to go past 500 in the next 8-10 years.

• In the last couple of years, the government has unveiled a series of reform measures and initiatives to make India a hub of defence manufacturing.

• India is one of the largest importers of arms globally. 

• The government wants to reduce dependence on imported military platforms and has decided to support domestic defence manufacturing.

• The defence ministry has set a goal of a turnover of $25 billion (Rs 1.75 lakh crore) in defence manufacturing in the next five years that included an export target of $5 billion (Rs 35,000 crore) worth of military hardware.

• In another important decision, the DAC also extended the timelines for procuring urgent capital acquisitions under the delegated powers to the armed forces up to August 31, 2021, to enable the armed forces to complete their emergency procurement. 

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