Blacklist effect: Tank ammo at critical low levels, MoD waives policy to buy

The Army has officially conveyed to the government that its war reserves for certain ammunition have fallen below critical levels. This has led the Defence Ministry to kickstart emergency procurement in some cases by exempting them from the offsets policy. This policy requires that in any purchase of over Rs 300 crore, the company or firm involved must re-invest 30 per cent back in India.

The instant case is that of tank ammunition called the Armoured Piercing Fin-Stabilized Discarding Sabot (APFSDS). The Army is learnt to have put it down in writing that it needs about 66,000 APFSDS rounds as an "immediate operational necessity". Similar is the problem with ammunition for the Smerch multi-barrel rocket launcher systems.

The APFSDS is vital for the Armoured Corps to take down enemy tanks in a tank-to-tank battle. India had a long-term arrangement with Israel for the ammunition but with Israel Military Industries (IMI) now blacklisted — facing a CBI probe — the Army has had to scout for fresh suppliers.

A Russian entity is said to have come forward but has quoted a price that is roughly 400 per cent higher than usual taking the cost beyond Rs1000 crore. This high quote had the Defence Acquisition Committee in a spot since the Russian firm is said to have been unwilling to accept the offset policy's 30 per cent condition.

Result: the government last week exempted the deal from the offsets policy.

Defence Minister A K Antony, who left for Russia this morning on a bilateral visit, is expected to take up the issue of high cost with the Russian government at a political level.

Meanwhile, in a similar case, the government has decided to float tenders to urgently import Bi-Modular Charge (BMC) systems. Without this charge in their ammunition, the upgraded 130-mm artillery guns can only fire a range of 18 to 23 km, which is half their range of 38-40 km. The BMC systems were to be made in the new Nalanda Ordnance Factory, but that has failed to take off because IMI and South African technology partner Somtech, a subsidiary of Denel, are in the blacklist.

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