In what is likely to be the first major ‘Make in India’ project in defence, the defence ministry is about to sign a deal with the US government to assemble 145 BAE Systems M777 155mm/39mm calibre lightweight howitzers in India.
Estimated to be worth $700 million, the deal is being done through the Foreign Military Sales route and a draft Letter of Acceptance (LoA) has been agreed upon between the Pentagon and the defence ministry.
The ministry had given BAE Systems, the manufacturer of M777 artillery guns, till October 31 to submit its offset agreements with local companies.
This includes the Indian company to whom BAE Systems will transfer its M777 assembly, integration and test (AIT) facilities from Hattiesburg, Mississippi (US).
BAE Systems has entered into MoUs with over 40 Indian companies to fulfill the offset requirement, which are 30 per cent of the contract value. The Indian partner for the AIT facilities, where 70 per cent of M777 gun’s assembly will be completed, is yet to be announced.
“Several companies have the capabilities to perform such work and BAE Systems is evaluating proposals. Establishing an AIT facility in India will lay a foundation to expand future work content in India, potentially leading to M777s for India and for possible export,” Mark Simpkins, Vice-President & General Manager-India, BAE Systems, told The Indian Express.
The LoA is expected to be inked later this year, nearly eight years after the M777 purchase was mooted during the UPA-1 regime. The Army hopes to get the first guns within six months of the signing of the LOA, so it can work out the Range Table Development and start training the artillery units.
The draft LoA — which contains delivery schedules, guarantees, after-sales technical services and spares support — was sent by Pentagon in August this year after defence ministry issued a letter of request in June. A fresh LoA had to be negotiated after an earlier LoA was cancelled in October 2013 due to differences over gun’s pricing. Price had become a major factor after defence ministry’s delay in placing the order of the M777 gun. With no other global orders, BAE Systems had, in 2013, suspended its facilities at Barrow-in-Furness, northern England, where around 30 per cent of the gun is fabricated.
According to defence ministry sources, the overall price for M777 now is around 6-8 percent above the price previously offered in 2013. But the previous LoA did not have any provision for assembling the guns in India. With the AIT facilities included now, defence ministry sees the current deal as a totally different one.
Weighing only 4,200 kg, the M777 gun is a lightweight howitzer which can be carried via a sling on the Chinook helicopters. India had signed the deal for 15 Chinook helicopters during Prime Minister Narendra Modi’s visit to the US in September.
The light weight of M777 guns comes from its barrel made out of Titanium and other proprietary metallurgical technologies held by the United States. Even for the guns which will be assembled in India, the barrel will continue to be manufactured at the US government facility at Watervliet Arsenal near New York.
The acquisition of M777 guns has acquired utmost priority because of shortfalls of artillery guns needed to equip army’s new Mountain Strike Corps on China border, which is currently being raised as per schedule. The shortfall in combat equipment for units deployed on China border in Eastern Command was on the agenda of the army commanders’ conference earlier this month. According to some senior army officers present in the conference, the lack of artillery guns – particularly the delayed acquisition of lightweight M777 howitzers – had led to a heated discussion about their availability.