NEW DELHI — 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.

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.

Two The development agencies (DAs) were tapped to compete for TCS. The first is a consortium composed of made up of 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 same tax incentives as are given to BEL, and insists that the intellectual property rights of the system developed to be vested with the developer and not the Ministry of Defence. state owned Bharat Electronics Ltd.imited (BEL), the other DA selected.

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.

Since the selection of the DAs in early 2014, no headway has been made in the development of a TCS prototype, of TCS the source added.

The private sector DA includes Larsen & Toubro, (L&T), Ltd., Tata Power SED and HCL Ltd., which who have formed a special purpose vehicle (SPV) based on an equity-sharing basis. The second DA, shortlisted in early 2014, is BEL. the state Owned Bharat Electronics Limited (BEL) the second DA.

Under the "Make in India" category, each consortium DA will develop two TCS prototypes at a cost of $100 million each. The government will finance give 80 percent of the costs for funds to each of the DAs for the development prototypes, which will then be technically 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.

The Army will use TCS will be used by the Indian Army to provide a dedicated mobile communication system with anti-jamming and electronic countermeasures capabilities. facilities.

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, "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."

In addition, because BEL is state-owned, it he state owed gets DA gets special tax incentives on the import tax of technologies that are not imparted to the domestic private sector companies.

An other executive from another company in the of another entity of the private- sector DA said, "The major problem is legal as the special purpose vehicle (SPV) 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."

Since TCS would be a dedicated strategic project, the Indian Army will want to ensure the "sanitize" the 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.

There is uUncertainty exists among the DAs about how the Indian Army will ensure would sanitize each of the technologies, whether either homegrown or imported, are sanitized. which will be incorporated the prototype.

"I hope this process of sanitization does not become too much of an interference in the development," said the first an executive.(first one).

"The DAs have to take an undertaking from the overseas equipment manufacturers OEMs for unrestricted use of the imported technologies. The norms for checks on technologies would be uniform for both DAs," the executive added.

TCS was first conceived in 2000 but was delayed because the MoD Indian Ministry of defence (MoD) was unable to decide in which category the TCS should be built. Initially, the plan was it was thought to build the project on a "Buy and Make" basis, which would involve involving overseas companies. But later, BEL urged insisted to state owned Bharat Electronics Limited (BEL) impressed on the MoD to give it the contract since allow it to build TCS on nomination basis since it involved a strategic project.

In 2012, the MoD decided to build the project in the "Make in India" category and in early 2014 MoD shortlisted the two DAs. to compete.

The Indian Army needs TCS as quickly as possible, an Army official said, expressing concern the at the earliest and procedural dispute will cause further delays. issues could jam the project further an Indian Army official said. "Even Pakistan has developed its own TCS kind of project, and further delays of the Indian project will affect the combat worthiness of the Indian Army," the official added.