Kochi: The central government mandate to open up the defense sector for private sector participation is having an adverse impact on the state’s Defense Public Sector Undertakings (DPSU).
Amid the alleged raw deal meted out to Cochin Shipyard Limited (CSL) in big-ticket defense deals, the Kalamassery unit of Hindustan Machine Tools (HMT) has also been left out of the list due to large-scale involvement of the private sector in the defence procurement procedure.
With the center pushing the ‘Make in India’ agenda with selection of private sector majors as the strategic partners, the HMT has recently lost a chance to take part in tenders for procuring defense equipment worth Rs 16.40 crore.
As per the new tender norms, that intend primarily to improve indigenous procurement, experienced Original Equipment Manufacturers (OEM) such as the HMT are not allowed to participate in tender process.
As a result, state-owned manufacturing company under the ministry of heavy industries and public enterprises was omitted from the ongoing tender process for the procurement of computer numerical controlled (CNC) shell turning wood lathes used in the production of larger ballistic missiles.
Notably, the HMT was the only Indian company to make a cut in a global tender processes when bids were floated for the procurement of four CNC machines last year.
While the bid quoted by a foreign bidder participated in the tender was Rs 40 crore, the HMT emerged as the lowest bidder quoting Rs 4 crore per machine. Although the authorities had selected the tender from the HMT, the contract has not been awarded yet.
The latest tender was floated for procuring four CNC machines for the Ordnance Equipment Factory in Kanpur. The defense department has also charted out plans to procure 10 CNS machines at an estimated cost of Rs 40.40 crore. The deal of 14 CNS machines alone is estimated to be worth Rs 56.40 crore.
The HMT has been developing CNC machines for the department for defense for over two decades. During the 1995-2008 period, the company had secured contracts for manufacturing CNC machines for the production of eight indigenous missiles. Moreover, another deal worth Rs 27 crore is in the final stages of delivery.
As the department of defense and the Indian Railways are the major clients of the HMT, the new defense procurement policy could have serious financial implications on the survival of the company.