NEW DELHI \u2014 Procedural disputes are delaying development of the Indian Army’s Tactical Communication System (TCS), the first weapon project slated for the “Make in India” category, said a Ministry of Defence source.<\/p>\n\n\n\n
India’s first weapon project, the Tactical Communication System (TCS), to be developed and produced in the “Make India” category, reserved only for domestic industry has hit a road block because it has got embroiled in procedural issues, said a source in the Ministry of Defence.<\/p>\n\n\n\n
Two The <\/span> development agencies (DAs) were tapped to compete for TCS. The first is a consortium composed of made up of <\/span> private sector defense companies, and the other is state-owned Bharat Electronics Ltd. (BEL). The private company consortium said it would not proceed with development of a TCS prototype until it receives the will go ahead with the development of the prototype only after they get <\/span> same tax incentives as are given to BEL, and insists that the intellectual property rights of the system developed to <\/span>be vested with the developer and not the Ministry of Defence. state owned Bharat Electronics Ltd.imited<\/span> (BEL), the other DA selected. <\/span><\/p>\n\n\n\n In addition to issues relating to tax, the private sector DA wants the intellectual property rights of the systems developed to be vested with the developer.<\/p>\n\n\n\n Since the selection of the DAs in early 2014, no headway has been made in the development of a TCS prototype, of TCS <\/span>the source added.<\/p>\n\n\n\n The private sector DA includes Larsen & Toubro, (L&T), <\/span>Ltd., <\/span>Tata Power SED and HCL Ltd., which who <\/span>have formed a special purpose vehicle (SPV) <\/span>based on an equity-sharing basis. The second DA, shortlisted in early 2014, is BEL. th<\/span><\/span>e state Owned Bharat Electronics Limited (BEL) the second DA.<\/span><\/p>\n\n\n\n Under the “Make in India” category, each consortium <\/span>DA will develop two TCS prototypes at a cost of $100 million each. The government will finance give <\/span>80 percent of the costs for funds to <\/span>each of the DAs for <\/span>the development <\/span> prototypes, which will then be technically<\/span> evaluated, tested on the ground and one will be shortlisted for production. The process is expected to take about 36 months. by either of the DA.<\/span><\/p>\n\n\n\n The Army will use TCS will be used by the Indian Army <\/span>to provide a dedicated mobile communication system with anti-jamming and electronic countermeasures capabilities. facilities.<\/span><\/p>\n\n\n\n Demanding a level playing field, an executive with the private sector DA said, Demanding a level playing field with the state owned DA an executive of one of the DA said, <\/span>“The Indian government has already created facilities in BEL which would be utilized by them free of cost, whereas the private sector consortium would have to make investments that would be loaded on our offer. Ideally, the depreciation and interest of the MoD-funded facilities should at least be loaded on BEL to ensure a level playing field. This is still an issue to be resolved.”<\/p>\n\n\n\n In addition, because BEL is state-owned, it he state owed <\/span> gets DA gets <\/span> special tax incentives on the import tax <\/span> of technologies that are not imparted to the domestic <\/span>private sector companies.<\/p>\n\n\n\n An other <\/span> executive from another company in the of another entity of the <\/span> private- sector DA said, “The major problem is legal as the special purpose vehicle (SPV) <\/span>formed by private consortia is not yet recognized by MoD. However, in their efforts to move forward, the qualitative requirements have been shared by the user [Indian Army] for DAs to respond with their costs for the prototype. That discussion is on currently. However, even if this is cleared, the legal clearance has to happen prior to disbursement of funding by MoD.”<\/p>\n\n\n\n Since TCS would be a dedicated strategic project, the Indian <\/span> Army will want to ensure the “sanitize” the <\/span> technologies built into the prototype and the final system are “sanitized,” an Indian Army official said, meaning the technologies are developed exclusively for the Army and will not be shared.<\/p>\n\n\n\n