Sources in the defence and security establishment said that Bengaluru-based SSS Defence won the contract on quality beating heavy bidding by the Chinese.
While the Nepalese Army used to import ammunition from India, they had stopped doing so after it replaced the Indian-made INSAS rifles with the Korean and American supplied M4s, M16s and other NATO rifles.
Following a deadly encounter with Maoists in 2005 in which 43 Nepalese soldiers were killed, its spokesman called the rifle substandard and claimed that the operation would have been more efficient had they got better weapons.
Indian and Nepalese Army share a long history and there are about 35,000 Nepali Gurkhas serving in the Indian Army while there are over 1.3 lakh lakh veterans back in the Himalayan Kingdom who continue to draw full pension from India for their military service.
Estimates suggest that salaries and pensions of Nepalese Gurkhas in the Indian Army alone totals more than the annual budget of the Himalayan Kingdom’s Army budget.
The contract and its significance
Talking about the ammunition contract, sources said that the delivery is ongoing and will be completed by the beginning of next year.
The ammunition is being manufactured by the SSS Defence at its factory in Andhra Pradesh.
The company has a joint venture for production of ammunition in India with Brazilian firm CBC Defense, the world’s second largest producer of military ammunition.
CBC has been a supplier to the Indian armed forces and has a contract going on for small caliber supplies to the Indian Army as well.
Explaining the significance of the Nepealse contract, sources said that in the last eight years the Army there had not bought a single Indian weapon system or ammunition.
“The Nepalese Army had written to us asking for bids by our firms. Bids were also sought from the Chinese. The Nepalese Army undertook its own evaluation process and selected SSS Defence. The contract for the same was government to government,” a source said.
Sources said that the contract is yet another example of India’s growing defence industry and the export potential for Indian systems.
India’s defence exports
India is looking at its highest-ever defence exports this fiscal with sales touching Rs 8,000 crore in the first six months.
India’s defence exports had touched a record Rs 13,000 crore in the 2021-2022 fiscal, which was nearly eight times of what it was in 2014.
In 2020, the Narendra Modi government had set a target of Rs 35,000 crore.
Incidentally, in October last year, SSS Defence had defeated Israeli firm Fab Defense, also known as Zahal, to bag a contract to upgrade a limited number of Kalashnikov rifles with a unit of the Indian Special Forces.
The company is the first Indian company to come up with a range of upgrade kits for AK47s and Draganov marksman rifles in use with the Army and a range of self-designed and manufactured small arms including carbines and snipers. ($5 billion) export in aerospace, and defence goods and services by 2025. This was part of the planned turnover of Rs 1.75 lakh crore ($ 25 billion) in defence manufacturing by 2025 that the government is aiming to achieve.