Oct 09, 2013 at 08:51am IST

Row over Indian PSUs being barred from taking part in aircraft deal

New Delhi: Top UPA ministers are battling it out over a $ 3 billion aircraft deal. Heavy Industries Minister Praful Patel has taken on the UPA government over a New Defence Purchase clause.

This came as the Indian Air Force (IAF) barred Indian PSUs like Hindustan Aeronautics Limited (HAL) from taking part in the aircraft deal. IAF shortlisted five foreign firms to buy 56 new aircraft.

ALSO SEE IAF bars Indian PSUs from taking part in $ 3 billion aircraft deal

NCP leader and Union Minister Praful Patel has written to Defence Minister AK Antony asking why PSUs like HAL have been barred. In identical letters to Prime Minister Manmohan Singh and Defence Minister AK Antony, Patel has said that PSUs should be given an equal opportunity and level playing field and it would encourage healthy competition.

"This being a government/public procurement, an equal opportunity and level playing field is required to be provided to all capable entities irrespective of being Public or 'Private' in nature. This will also encourage healthy competition," said Patel in his letter. Antony as a head of the defence acquisition council (DAC) had approved the IAF proposal for procuring these aircraft sidelining the PSUs.

Patel, who also holds the Public Enterprises portfolio, further said, "There are many PSUs who meet all the prescribed criterion for participating in this tender, but are being denied the opportunity to participate in this tender only because they are PSUs".

The Indian Air Force has to acquire 56 transport aircraft to replace its aging Avro fleet. In the tender, issued on May 9 this year, the defence ministry had bypassed PSUs as Hindustan Aeronautics Ltd (HAL) and said new aircraft will be produced by the Indian private sector firms.

The tender was issued to eight foreign vendors including American Lockheed Martin, Swedish Saab, Russian Rosoboronexport, Spanish Airbus Military, Italian Alenia and Brazilian Embraer and they will have to find an Indian partner to produce 40 aircraft within India. Indian majors such as Tata, Mahindra Defence Systems, Reliance Industries and L & T were expected to partner the bidding foreign partners for the programme.

This comes just ahead of the Prime Minister's visit to Russia and China where this deal is expected to be signed.

(With additional information from PTI)