Acceptance of necessity (AoN) date lapses today
Eighteen months after an extension was granted by the Defence Acquisition Council for Project P-75 (I), which involves the construction of six diesel-electric submarines at a cost of $10.9 billion, neither an Indian shipyard nor any foreign original equipment manufacturer (OEM) has been selected “to get cracking on the project.”
Six submarines planned to be constructed as part of Project P-75 (I) have a deadline coming up. The diesel-electric submarine project has an acceptance of necessity (AoN) date that is set to expire on Tuesday.
“All defence procurement proposals go through a labyrinthine procurement procedure,” said a senior official at an Indian defence shipyard seeking anonymity. “The first is the AoN stage and then the tendering stage. The first approval for P-75 (I) came in 1999. The delay is hurting everybody,” said the official.
Noting that the project was slated to be the first one to be undertaken under the strategic partnership model, the official said, “Now the AoN extension is set to expire on February 6, without a single shipyard or a foreign collaborator getting selected.”
In the second part of Phase I of the country’s 30-Year Submarine Building Plan, six submarines were planned to be constructed as part of Project P-75 (I). The decision was first approved by the Cabinet Committee on Security (CCS) in 1999.
The Defence Acquisition Council (DAC) approved, in October 2014, the construction of all six submarines in India, by an Indian shipyard, with transfer of technology from a foreign collaborator. At the same time, it also approved the constitution of a multidisciplinary core committee to help with the identification of suitable Indian shipyards. Though the core committee shortlisted five shipyards – Hindustan Shipyard, Mazagon Dock, Garden Reach Shipbuilders and Engineers, Larsen and Toubro and Reliance Defence – Larsen and Toubro's Kattupalli facility in Tamil Nadu and Reliance Naval and Engineering's shipyard in Pipavav, Gujarat, were found to be the only two eligible to participate in the P-75 (I) programme.
Sources said the core committee submitted its report to the Defence ministry in May 2015, and the same was discussed by the DAC in September 2015. It was then decided that the project be based on the strategic partnership (SP) model as the experts committee had also recommended the same.
“The SP model aims to rope in private firms to build military platforms like submarines and fighter jets in India in partnership with foreign entities,” officials said.
The two Indian shipyards submitted their bids in partnership with an international shipyard. Sources indicated that four foreign shipyards – the Naval Group, Russia's Rosoboronexport Rubin Design Bureau, Germany's ThyssenKrupp Marine Systems and Sweden's Saab Group - have responded to the government's request for proposal (RFI) for the project.
Defence PSUs’ role
The project could have got delayed for another reason. Sources indicated that there is a provision in the SP Policy that “the defence ministry could also include and consider the role of a Defence Public Sector Undertakings (PSUs) to undertake production arrangements, including transfer of technology in the project.”
In this regard, defence PSU Mazagon Dock and Hindustan Shipyard, who were earlier slated for the P-75 (I) project as partners, could be contenders, as they have the necessary infrastructure already in place, sources said.
However, the delays have been taxing both Indian shipyards as well as foreign collaborators. “We are waiting for the government’s nod to launch the process to select the Indian shipyard for joint manufacture of the submarines with the chosen foreign entity,” an official said.
Noting that it would take another seven years, after all the contracts have been inked, for the first submarine to roll out, the official maintained that another extension of the AoN, “which is a given, would just be an exercise in futility unless the government decides to move ahead and announce the shipyard and its foreign partner.”