Landmark deal for Indian defence industry

The Government of India (GoI) has embarked upon an ambitious plan of developing about 2,600 new-generation Future Infantry Combat Vehicles (FICVs) to replace the currently ageing fleet of the Indian Army.

The defence ministry has mandated that only Indian companies will be eligible for this deal and has shortlisted four companies that will be eligible for this bid. The shortlisted companies are Tata Motors, the Mahindra Group, L&T and the Ordnance Factory Board (OFB). This would mean that three private companies and one public company are in the fray for the deal.

Infantry Combat Vehicles (ICVs) look similar to small tanks and can carry about 7-8 people on board. They are lightly armoured and highly mobile vehicles which can travel deep into the army territory. The FICV to be developed for the GoI must be bullet-proof, amphibious and transportable by air. Also, the FICV should have atleast 50% indigenous content.

The defence ministry is soliciting an Expression of Interest (EoI) from each of the four companies in which the companies will detail their plan about developing the FICV, the technologies that they intend to use, the timeline involved and the estimated capital expenditure on the project. The companies are also expected to state a minimum order quantity which will make the project viable.

After careful evaluation of the EoIs, two contractors will be selected to develop the FICV prototypes. The FICV prototype which gives better field results will be finally chosen. The company finally selected will be allocated 65-70% of the order whereas the other contractor will get the remainder of the order.

The cost of the project will not be borne by the MoD alone. The MoD will fund about 80% of the total cost while the contractor will fund the remaining 20%.

It is believed that the Ordnance Factory at Medak might be utilised for making the FICVs since building a new facility for the same purpose would be a waste of resources. The FICVs should be ready for use by 2018.

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