$8 bn Futuristic Infantry Combat Vehicle deal fate under cloud; Defence Min to seek DPR from Indian Army

Uncertainty continues over the $8-billion Futuristic Infantry Combat Vehicle (FICV) project, as the ministry of defence (MoD) has asked the Indian Army to seek a detailed project report (DPR) from all the contenders who had received the expression of interest (EoI). About 2,600 FICVs — high-tech complex vehicle programme under the ‘Make’ category — will be needed to replace the army’s old Russian-origin BMP-2 infantry combat vehicles. ‘Project FICV’ will have an expected life span of 32 years.

Future Infantry Combat Vehicle (FICV)

Future Infantry Combat Vehicle (FICV)

Sources told FE, “The Integrated Project Management Team (IPMT) has been asked to seek detailed reports from all the companies, as the MoD has not been able to down select any of the companies who have responded to EoI.” “This entire process of getting report from all the vendors is expected to take more than a year,” the source added. Preliminary services qualitative requirements (PSQR) will act as guidelines during preparation of DPR.

The MoD has been trying to announce its final decision since last year. However it could not happen due to various representations made by companies who have been keen on participating in the programme. Just when the government was about to make the final cut, senior leadership from various companies have been making individual representations to the MoD, thus causing delays. The companies in the race included Tata Motors, Tata Power SED, Mahindra, Pipavav Defence, Punj Lloyd, Ordance Factory Board (OFB), Titagarh Wagons, Rolta India, Bharat Forge and Larsen &Turbo (L&T). As reported by FE earlier, The Indian companies have been encouraged to form consortium (maximum 5) and also tie up with as many foreign companies to bring home latest technologies on a licence basis to strengthen the indigenous know-how. However, since the OFB has no expertise, it has to work with a consortium of private companies.

According to E&Y report ‘Eye on Defence’2016, “Indigenization is one of the important requirements of the program; therefore, parties must agree to collaborate to achieve the respective indigenisation targets for the Development Phase and Serial Production Phase. Minimum 30% indigenous content on cost basis (excluding taxes, duties and other statutory obligations) is mandatory for the developed prototype of FICV. However, with 30% indigenous content, there is insufficient incentive to indigenize, which should be the primary objective in a ‘Make’ project.” Under the ‘Make’ procedure, the defence ministry will choose the best two proposals. Those two companies and the OFB will design and develop separate FICV prototypes. The defence ministry would reimburse 80% of their expenses.

The Financial Express