India pays Russia a hefty $1.2 bn in Technology Transfer Fees for T-90S Main Battle Tank
India is in the process of manufacturing 464 T-90s Main Battle Tanks after paying a hefty Technology Transfer Fee to Russia. The total contract for 464 Tanks and for Full Technology Transfer signed earlier this month is valued at $3.12 Billion.
The deal stipulates that India will pay $1.2 billion to the Russian original equipment manufacturer UralVagonZavod and arms export agency Rosoboronexport for full technology transfer, while India’s state-owned Ordnance Factory Board will be paid $1.92 billion for local production of 464 T-90S tanks.
As per the contract, Russian defense companies will have to undertake full production and localization guarantees. Both Indian and Russian firms will be penalized by the MoD if the project hit production delays or cost overruns.
To avoid US sanctions, India will pay the Russian defense companies in Roubles.
One of the official from the Ministry of Defence described the price tag of the technology transfer as too high, but at the same time it will increase domestic production of the tanks from the current level of 40 percent to 80 percent. Complete localization of T-90S tanks in India is impossible, as a large number of parts must continue to be imported.
The 80 percent parts that will be locally manufactured are panoramic night sights, thermal imaging fire-control systems and explosive reactive armor, he added. The T-90 engines along with the transmission system that makes up 45 percent of the cost of a T-90S Tank will have to be imported from Russia.
India will manufacture a total of 120 T-90S tanks per year at OFB’s Heavy Factory in Avadi, southern India and complete the project within four years.
A senior Indian Army official said that 80 percent localization of the tank does not necessarily mean ‘advantage’ because life cycle support of the T-90S Tanks is not included. Absence of Life Cycle Support will force the Indian Army to pay three times more than the original cost of the tank.
The Indian Army currently operates 1,100 T-90S tanks. 300 out of the 1,100 tanks were directly imported from Russia.