The defence ministry said the indigenous manufacturer will be required to set up a new establishment to produce the ammunition

NEW DELHI: The defence ministry today announced that it has allowed private sector to manufacture eight selected ammunition for the Indian Army in a major reform initiative.

The ministry said the aim of the decision is to facilitate development of indigenous capacity, reduce import dependence and develop a robust supply of ammunition within the country.

"With the long-term objective of building capacity within the industry as a robust alternative source of ammunition, the government has approved manufacturing of eight selected ammunition for Indian Army by Indian Industry," the defence ministry said.

The Army has been reeling under severe shortage of ammunition and it has been pressing the government to address the issue in view of the security challenges the country is facing.

At present, various ordnance factories supply ammunition to the armed forces.

The move comes around six months after the government unveiled the ambitious strategic partnership model under which Indian private sector companies will be allowed to form joint ventures with foreign defence majors to build fighter aircraft, helicopters, submarines and main battle tanks in India.

The prospective manufacturer will be free to select their technology partners, negotiate and obtain transfer of technology (ToT). The technology partners could be indigenous or foreign manufacturers.

The defence ministry said the indigenous manufacturer will be required to set up a new establishment to produce the ammunition.

It said Defence Minister Nirmala Sitharaman has approved a long term contract of 10 years with the selected ammunition manufacturer, to facilitate a viable commercial model.

"The selection of manufacturer will be through an Open Tender Enquiry under two bid system. Companies are allowed to bid for any number of ammunition types. However, a company will be awarded not more than three contracts," the ministry said.

It said Individual Indian companies, as per Indian Companies Act 2013, with foreign equity not exceeding 49 per cent, owned and controlled by resident Indian citizens, and consortium consisting of only Indian companies and wholly owned subsidiary company, were eligible to participate.