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11:33 AM, July 16, 2018
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India’s Ministry of Defence has set up a committee to examine prices on defense equipment quoted by the Indian public sector companies to the armed forces, based on the allegations that the indigenously produced military products are costing higher than the ones offered by the foreign vendors.

The Army, Navy and the IAF have been complaining about Defence Public Sector Undertakings (DPSUs) pricing higher than what the original manufacturer supplied the same equipment for.

Defence Minister Nirmala Sithraman was quoted as saying by Tribune India: “I have asked a panel to look into the costing of products manufactured by the DPSUs.”

To begin with, the newly set up committee will examine the price of the Light Combat Aircraft (LCA) offered to the Indian Air Force. The committee, headed by the Director of Costs in the Ministry, has been asked to report back by August-end, the report says.

Hindustan Aeronautics Limited (HAL), a company owned by the MoD, quoted a price of INR 463 crore per jet in April, raising eyebrows. The Swedish Gripen jet was offered for INR 455 crore and F-16 from the US for INR 380 crore, and both to be made in India.

The price of the Russian Sukhoi fighter, which HAL assembles at Nashik, is Rs 415 crore while the Russians supply it at Rs 330 crore. Besides these Tejas and Sukhoi prices, the committee will look at each equipment of the DPSUs.

The panel will also study the costing formula of artillery guns, trucks, ammunitions, missiles, etc.

Calling it a “good” move, Amit Cowshish, ex-Financial Adviser (Acquisition) in MoD, said: “The MoD has every right to know the right price of equipment it gets from DPSUs”.

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