The Indian government has signed a defence deal with Israel for setting up an artillery munitions factory in Bihar state.
The contract has been signed between the state-owned Ordnance Factory Board (OFB) and IMI of Israel to set-up an ordnance complex of five plants in Bihar. The collaboration aims to manufacture artillery munitions and the project is worth $240 million. The plants will manufacture 155mm Bi-Modular Charge Systems (BMCS) and other propellant charges for heavy calibre artillery ammunition for the Army’s Bofors howitzers and other guns.
Interestingly, there is no offset obligations involved in this deal and India has decided to keep this a low-profile collaboration. The earlier controversy with Israel regarding the MR-SAMs has already put the Indian government in a tight spot since questions are being raised about the $120 million business charges by IAI in the deal. Besides that, the government is also under the scanner for lack of transparency in its defence deals.
The project in Nalanda, Bihar for the manufacture of artillery munitions has a murky past since the project was aborted by the then NDA government. The project was slated to be undertaken by the South African firm Denel and an initial $60 million were spent. However, Denel was blacklisted due to some pay-off controversy and the project was halted. However, other firms IAI and Rafael were exempted. In a fresh global tender, IAI was approved for the project by an expert committee in January this year.
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