Jul 22 2020
Following the news that the Indian Ministry of Defence signed a contract with Bharat Earth Movers Limited (BEML) to procure 1,512 Mine Ploughs for T-90 tanks;
Mathew George, Ph.D., Aerospace & Defense Analyst at GlobalData, a leading data and analytics company, offers his view:
“This deal focuses on building the local industry and its capability while ensuring healthy orders for local Defense Public Sector Undertakings (DPSUs). The government had earlier announced, as a part of reforms and support for the sector, that there would not be global tenders for contracts below INR 2bn (US$26 m). This deal though, pegged at INR 5.57bn (US$74.4 m) has a categorization of Buy and Make (Indian), which means that a minimum of 50% of the content will have to be indigenous (local) in the ‘make’ portion of the contract, which hints at a balance the government has sought with this.
“The timing of this deal comes along with the Ministry of Defence’s announcement confirming the planned induction of the Rafale at the end of this month. However, these aren’t for optics, but are in line with India’s push to modernize its forces to deal with a two-front war if required. The T-90 tanks are the latest tanks for India, and these ploughs will help them be effective in the various operational environments India plans to make use of them.
“Even though there was a stated push towards indigenization, it is likely for India to balance domestic ‘production and capability’ with foreign imports of advanced military equipment till it finds itself comfortable and in a position to develop technology on its own. The country had recently made announcements to encourage global players to think of investment and development in India as a lucrative option. Announcements like these will help sway the discussion in those companies to set up manufacturing and be competitive with pricing when it comes to other such smaller programs. It’d hard pressed on companies to ignore a market like India and focus only on its large platform acquisitions.”