New Delhi: The Ministry of Defence is likely to allow state-run Hindustan Aeronautics Ltd (HAL) to bid for the Navy’s program to buy 111 naval utility helicopters (NUHs), as the Narendra Modi government reviews all foreign procurement programs in favour of indigenous systems.

The Navy’s proposed NUH program comes under the ‘strategic partnership’ route, which will allow a selected foreign Original Equipment Manufacturer (OEM) to partner a nominated Indian company to manufacture the choppers domestically.

Sources in the defence and security establishment said that the naval program will come under discussion as soon as the government focuses on pruning the list of projects under the ‘Buy Global’ category in favour of indigenous projects.

Under the Buy Global category, procurement is done directly from the foreign OEM.

The NUH development comes days after the Defence Acquisition Council (DAC), chaired by Defence Minister Rajnath Singh, has scrapped the Coast Guard programme to buy 14 twin-engine helicopters under Buy Global, for which the Airbus was the prime contender.

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NUH Program Under Focus

The Navy’s procurement of 111 NUHs is one of the big programs that has been pending for a while.

While this program won’t be scrapped — since it is not in the Buy Global category — HAL is likely to be allowed to bid as an OEM, sources said.

In 2019, HAL had stumped the Indian private industry and foreign players when it submitted two bids for the Expression of Interest issued by the Navy for the NUH program — one by itself and another through its joint venture with Russian Helicopters, which is meant to produce the Kamov chopper.

The industry had then vehemently opposed the inclusion of HAL alleging it “kills the very basis of Strategic Partnership, which was aimed at creating capabilities in the private sector, over and above the existing capabilities in the public sector”.

However, defence sources said the HAL has proven its blade-folding capability to the Navy and if the Coast Guard can forgo plans to buy foreign helicopters in favour of HAL, there is no rationale of not including HAL in the competition for NUH.

The NUH program will be the first major challenge to the Narendra Modi government’s ‘Aatmanirbhar’ (self-reliance) push.

HAL’s argument was that the strategic partnership model focused on bringing in technology that India didn’t possess, like in the heavier weight lift class.

“But getting something, which is in the same weight class as ALH (Advanced Light Helicopter), it does not make sense,” a senior HAL executive had said at the time.

Why Buy Global Category Is Being Reviewed

Besides the chopper deal for the Coast Guard, the defence ministry has also scrapped two projects with regard to acquisition of a short range missile, and of all-terrain vehicles for the defence forces, under the Buy Global category.

The Army, Navy, Air Force and the Coast Guard were earlier asked by the defence ministry to prepare a list of foreign-procurement plans that could be replaced by indigenous buys. Accordingly, each service had prepared a list of such items.

Sources said another review meeting will soon be held to take a look at more such items. The cumulative value of these programs run into several billions of dollars, they said.

They also clarified that the decisions won’t impact deals already inked under the Buy Global route or those being pursued under the government-to-government route and the Foreign Military Sales route with the US.

Sources said indigenous systems have been a major focus area of the Modi government and it was felt that there needs to be a marked reduction in direct import. The aim is to buy equipment and systems manufactured by Indian companies or by foreign OEMs who set up production facilities here.

During his recent talks with his Russian and French counterparts, Defence Minister Rajnath Singh had stressed the need to “either collaborate with Indian companies or simply produce in India”. He wanted the relationship to move away from a pure buyer-seller perspective to one of co-development and manufacturing, sources said.

The Modi government also sees defence as a sector with huge manufacturing potential, added sources.