The multi-billion dollar deal between India and Russia for four stealth frigates has run into trouble over pricing and local construction with Transfer of Technology.
What happened?
India and Russia had signed an Inter-Governmental Agreement for four additional Krivak or Talwar class stealth frigates during bilateral discussions on the sidelines of the BRICS summit in October 2016.
As per the agreement, two ships are to be procured directly from Russia and two to be built in India with Russian assistance.
In the commercial offer submitted later, Russia has quoted about $990 million for the two ships to be directly imported. For those to be built in India, the commercial offer quoted about $800 million for “supply of material to ensure construction of the two ships in India” and $51 million for “supply of project documentation” to ensure their construction. The cost of construction of the two ships in an Indian yard was to be arrived at later.
Is it a setback to Make-in-India initiative?
Defence sources said this would steeply push up the overall cost of the two ships and it was seen asa way to ensure that all four ships were imported from Russia.
“It will be a serious setback to the Make-in-India initiative,” one official observed.
The issue was discussed in detail by the Defence Acquisition Council. It has been decided that identification of the shipyard to be deferred till the cost for the construction of the ships in India was not cleared.
Officials said that, “the decision on procurement of two ships from Russia cannot be initiated unless details of Transfer of Technology, cost etc of balance two ships are found acceptable.”
“The Navy has conveyed its concerns to Russia. They were told that we will either take all four ships or none,” official sources added.
