Rs 21,738 Crore Naval Helicopters to be new Govt’s First Defence Buy

The Rs 21,738 crore procurement of 111 light Naval Utility Helicopters (NUH) for the navy is on track to be the first big procurement of the new National Democratic Alliance (NDA) government. On Thursday, the last day for vendors to submit responses to an Express of Interest (EoI) floated by the defence ministry on February 12, at least three international original equipment manufacturers (OEMs) submitted proposals to build their helicopters through an Indian industry designated as “strategic partner” (SP).

The OEMs who have responded include Lockheed Martin, Airbus and Bell Helicopters. Business Standard learns that the vendors proposals were not opened today. They are likely to be opened on June 3.

This NUH acquisition, which the defence ministry green lighted on August 25, is the first one being processed under the SP procurement model. This involveschosen Indian SP firms building major defence platforms in India with niche technologies and production knowhow supplied by a foreign OEM. “The OEMs have been mandated to set up [a] dedicated manufacturing line, including design, integration and manufacturing processes for NUH in India and make [the] Indian manufacturing line as a global exclusive facility for the NUH platform being offered,” stated the MoD in February, while releasing the EoI.

Business Standard learns that the navy has listed out six “must-have” technologies that the OEMs must transfer as part of the contract. In addition, the vendors will be required to transfer “manufacturing technology” that will drive the assembly line.

The proposal for building 111 helicopters allows the OEM to deliver the first 16 from its home production facility, but at least 95 helicopters must be manufactured in India with an ambitious level of 60 per cent indigenisation stipulated.

The Indian SPs are likely to be chosen from amongst Tata Advanced Systems Ltd, Mahindra Defence, Adani Defence, Larsen & Toubro, Kalyani Group and Reliance.

While the SP model of procurement was intended primarily for private sector firms, Hindustan Aeronautics Ltd (HAL) and Indo-Russian Helicopters Ltd (IRHL) – a joint venture set up by HAL, Russian Helicopters and Rosoboronexport to manufacture the Kamov 226T light helicopter in India under an Indo-Russian inter-governmental agreement (IGA) – have also applied to be SPs.

The NUH, which must be optimised for ship usage with facilities like foldable rotors is being procured to replace the navy’s vintage French-origin Chetak helicopters. Flying from warships, the NUH will carry out tasks like search and rescue, casualty evacuation, ferrying passengers from ships and low intensity maritime operations (LIMO) such as dropping torpedoes.

Naval multi-role helicopter (NMRH) ::

Also in the pipeline is the procurement of 24 MH-60 Romeo “naval multi-role helicopters (NMRH) from Lockheed Martin on a single vendor basis. The navy has sent Lockheed a Letter of Request and is expecting a Letter of Acceptance this week.

The DAC green-lighted the NMRH procurement on August 25, 2018. This is being acquired through the Foreign Military Sales (FMS) route, which means there will be no tendering. Instead, the US Department of Defense (Pentagon) will negotiate a price with Lockheed Martin, based on the price at which the US military procured the most recent tranche of MH-60 Romeo helicopters.

In FMS purchases, the buyer country typically pays less than the US military did for a platform. The Pentagon charges the buyer country a commission of about 3 per cent for negotiating and overseeing the procurement.

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