“The empowered committee had found that all the clearances were not in place (for the Adani bid) for the formation of the joint venture that put in the bid for the submarine project. The Defence Acquisition Council, which met today, (Tuesday) endorsed this decision," added the official.
Adani Defence declined to comment, while Hindustan Shipyard could not be reached.
The defence ministry did not identify the companies vying for the order. However, it said in a statement: “DAC approved shortlisting of Indian Strategic Partners (SPs) and the potential original equipment manufacturers that would collaborate with SPs to construct six conventional submarines in India."
Mazagon Dock Shipbuilders and L&T will now tie up with individual foreign partners to submit their final bids for manufacturing the six submarines.
Five foreign companies have expressed interest in the submarine project, of which Mazagon Dock Shipbuilders and L&T will choose one each as their partner. The companies are South Korea’s Daewoo Shipbuilding and Marine Engineering Co. Ltd, France’s Naval Group, Spain’s Navantia, Russia’s Rosoboronexport and TKMS from Germany.
The contract is being processed under the “strategic partnership model", which combines an Indian manufacturer with a foreign company for technology know-how.
“The strategic partnership model also aims at promoting India as a manufacturing hub for defence equipment, in addition to establishing an industrial and R&D ecosystem capable of meeting the future requirements of the armed forces, besides giving boost to exports," the defence ministry statement added.
A second official said the submarines will have air-independent propulsion technology allowing them to stay underwater for weeks.
The Economic Times said last week that a tussle had broken out over the biggest Make in India project for the defence sector, after the Navy refrained from going ahead with the joint public-private bid, while defence production officials emphasized that such combinations should be considered.
The Narendra Modi government has sought to promote indigenous production of defence hardware to cut costly imports and develop the local industry.
DAC also approved the indigenous purchase of equipment worth over ₹5,100 crore. These include sophisticated electronic warfare systems for the Army designed by Defence Research and Development Organisation and made by Indian companies.