13 April 2017

News Story: India to guarantee long-term ammo contracts to private sector

By: Vivek Raghuvanshi

NEW DELHI — India is seeking long-term deals with domestic private sector companies for a variety of ammunition at a cost of at least $3 billion over the next decade. The initiative aims to encourage capital investments by private sector companies in ammunition manufacturing facilities.

"Currently, India solely depends for ammunition needs largely on the state enterprise Ordnance Factory Board and imports from overseas. Yet there is critical shortage in some areas of ammunition," a senior Indian Ministry of Defence official said.

Early this month, the MoD floated a request for proposals aimed at private sector companies for the supply of 500,000 rounds of 30mm high-explosive grenades (VOG-17) for automatic grenade launchers under a 10-year contract. The RFP is part of a new MoD program known as "Manufacture Of Ammunition For Indian Army By Private Indian Industry." 

"Indigenous production of ammunition requires setting up of new manufacturing and testing facilities that are capital intensive. Notwithstanding the licenses issued for the same, the industry did not find it viable to put in investments without assured sourcing by MoD. It is for the first time that MoD is now assuring orders for 10 years with pre-committed quantities to enable industry to invest capital for setting up the required facilities," the MoD official said. 

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