SOURCE: ET
The deadlock over starting the Amethi rifle factory to manufacture 6.7 lakh AK 203 assault rifles is likely to be resolved, with the defence ministry stepping in by setting up a costing committee to take the project forward. The price bid for the ?4,300-crore project has been submitted and the committee has been given two months to reach an agreeable price for the project. As reported by ET, the project has been stalled for over a year as Russian partner Kalashnikov and the Indian Ordnance Factory Board (OFB) could not present a reasonable pricing plan.
Sources said that if the costing committee works as planned, the factory could get commissioned by October this year, ahead of a planned bilateral summit between Russia and India. The project has high priority on the bilateral agenda since an inter-governmental agreement was signed in January last year.
While the bid submission was initially slated for June 2019, the OFB sought 3-4 extensions of the same, until November 2019. At the latter’s request, the DAC also added a Price Variation clause hoping that this would help bring down the price of the rifles.
A separate quote was sought for the initial 1.2 lakh rifles and for another 70,000 rifles which were to be 100% indigenously manufactured –– the latter would form the base price under the Price Variation formula for the remaining 4.8 lakh rifles.
The joint venture sought four extensions to submit the bid, which finally came in February 2020. However, on examination, the price bid was much higher than the benchmark, considering the cost of such rifles manufactured by OFB as well as imports.
It was felt that this was unreasonable and not acceptable and the OFB was nudged to submit a more reasonable offer, which did not happen. Because of the national importance of the project and the inordinate delay over it, provisions from the Defence Procurement Policy 2016 have been invoked now to finalise it expeditiously.
Accordingly, a costing committee was set up to fix a fair price for the manufacture of the rifles –– its basic version ––keeping in mind the 100% indigenisation cost of Indian components.
https://defencenewsofindia.com/amethi-rifle-factory-deadlock-likely-to-be-resolved-costing-panel-set-up/
