India’s plan to procure145 BAE Systems M777 155 mm/39 calibre lightweight howitzers deal is being fast tracked by signing a letter of acceptance (LoA) by the Pentagon and Indian MoD.
“LoA is in the process of being finalized following broad agreement on its content between the Indian MoD and the Pentagon,” Janes reported Thursday.
The LoA includes revised tender price of an approximate US $700 million, delivery schedules, and guarantees and after sales support.
Industry sources said the MoD had also instructed BAE Systems to submit by the end of October its offset agreements with local companies, which are valued at 30% of the overall contract value and estimated to be worth around USD200 million.
The India Defense Acquisition Council cleared the procurement of M777 howitzers made by BAE Systems of the US in May this year.
International companies such as Denel, Rosoboronexport and BAE Systems had bid for a proposal to procure 814 artillery guns worth $2.5 billion in 2010. BAE Systems had won the contract to supply 145 M777 ultra-light howitzers worth $493 million.
Despite negotiations running into years, talks had broken down last year over price. “The case for procurement of ultra-light howitzer guns through the US government has not progressed due to cost issues and because the vendor has not been able to come up with a proposal fully compliant to the offset requirements,” the then-defense minister Arun Jaitley had told Parliament in July last year.
BAE Systems has offered to set up an assembly line with a local partner to make the guns domestically.