New Delhi: Defence Ministry on Saturday approved the much delayed purchase of 145 Ultra Light Howitzers, worth about Rs 5,000 crore, from the US and also the bulk production of 18 Dhanush artillery guns, the first acquisition of such weapon systems by the Army in three decades since the Bofors scandal.
Defence Acquisition Council (DAC), chaired by Defence Minister Manohar Parrikar, took up 18 proposals including new schemes worth Rs 28,000 crore for discussion.
Another key project that got an Acceptance of Necessity (AON), which will now allow the Navy to issue tenders, was the proposal to build six next generation missile vessels under 'Buy Indian' category for Rs 13,600 crore.
"DAC has approved progressing of ongoing case of procurement of 145 Ultra Light Howitzers through the Foreign Military Sales (FMS) route from US. DAC directed independent progressing of offset. The delivery of these guns will be in India which will help in substantial saving of transportation cost," a senior Defence Ministry official said.
The DAC has also shortened the supply period of the guns, with a strike range of 25 kms, sources said though the exact period could not be known.
The officer said that India had sent a letter of request to the US government showing interest in buying the guns which will be deployed in high altitude areas in Arunachal Pradesh and Ladakh, bordering China.
The US had responded with a Letter of Acceptance (LOA) and on Saturday DAC looked into the terms and conditions and approved it.
This letter will now be sent back to the US and the process for the payment of first instalment will begin. The offsets, under which BAE Systems, manufacturer of the gun, will invest about USD 200 million, will be pursued independently.
While 25 guns will come to India in a fly away condition, the rest will be assembled at the proposed Assembly Integration and Test facility for the weapon system in India in partnership with Mahindra.
The howitzers that can be heli-lifted were first proposed to be bought from BAE about 10 years back.
"We are pleased that the Indian government is progressing the Foreign Military Sale of M777. This combat-proven system will provide the Indian Army with superior artillery capability at an advantageous price with early deliveries," a statement by BAE Systems said.
The company said it will continue to support the two governments to progress to contract agreement. The cost will be more than the 2013 submission by "under 6 per cent".
"As committed, BAE Systems worked collectively with the US government in order for us to maintain (cost) escalation in the new LOA to under 6 per cent of the 2013 submission, whilst maintaining delivery of systems within six months following the implemented LOA," it said.
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