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SOURCE: ET

In a last ditch effort to make an entry into a Rs 21,000 crore project to manufacture naval helicopters, state-owned Hindustan Aeronautics Ltd (HAL) has written to the defence ministry requesting that its bid also be considered. The mega project under the strategic partnership (SP) model had been ‘reserved’ for the private sector, with the navy already having shortlisted four companies that would be eligible to tie up with a foreign vendor to manufacture 111 Naval Utility Helicopters domestically.

While Tata, Mahindra, Adani and Bharat Forge have been identified as companies that meet the financial and technical criteria required, HAL has been rejected as the bid documents had clearly mentioned that only private sector companies are eligible.

Sources said as the shortlist is yet to be approved by the apex Defence Acquisition Committee (DAC), HAL has requested a reconsideration, stating that it is the most qualified company to build choppers given its history in the aviation sector.

However, the HAL bid is likely to be strongly opposed by the navy that does not want any delays to impact the critical plan. The helicopter bid is also the pilot project under the SP model and would impact the fate of all other plans, including fighter jets and submarine construction. Sources said the matter could come up for discussion during the next meeting of the DAC scheduled on Thursday.

As reported by ET, the pilot project kicked off earlier this year after the ministry sent out a public request for bids. The bid—termed an expression of interest (EoI)—clearly specified that the applicant company needs to be a ‘private sector company’.

Not deterred by this clause, HAL put in two bids for the project—one through the parent PSU and another through its joint venture company with Russian Helicopters. Sources told ET that both the bids have been found to be invalid by the evaluating team that has drawn up the shortlist.

A final call on the matter has to be taken by defence minister Rajnath Singh-led DAC. Private sector companies that have invested in setting up teams and infrastructure for defence manufacturing are closely watching the next moves. A common refrain within the private sector has been that PSUs get an unfair advantage given the large amount of government investments that have gone into them for decades, which makes them difficult to compete with.

The naval helicopter contract, which is expected to be concluded within two years, has now matured into a three-way contest, with foreign companies already tying up with Indian partners. European player Airbus, which has offered two separate choppers for the contract has announced that it will be tying up with Mahindra Defence. US firm Sikorsky, which is now part of the Lockheed Martin group, had formed up an alliance with Tata Aerospace and Defence, and Russian manufacturer Kamov, which is offering its KA 226 chopper for the contract, has an agreement with Bharat Forge to manufacture the helicopters.

Other Indian players who applied for shortlisting but got rejected include Reliance Defence and Laxmi Machine Works. While Adani Defence has been qualified to participate, the company has not managed to forge any partnership for the project yet.

While HAL is unlikely to be selected as a strategic partner, the state-owned company will still get a big share of work and is likely to be a primary tier 1 supplier for the contract given its existing production facilities.