India will not allow Finmeccanica to take part in future military tenders till further notice, but ongoing contracts with the Italian defence major will continue.
New Delhi had in January terminated a controversial Rs. 3,727-crore contract with Finmeccanica’s UK-based subsidiary AgustaWestland for supplying 12 VVIP choppers following bribery allegations.
The defence ministry’s decision not to blacklist Finmeccanica follows the attorney general’s advice that a complete ban on the defence group could affect the military’s combat readiness.
The ministry said in an order issued on Tuesday that cases in which a Finmeccanica company happens to be a subcontractor or supplier to a firm with which India has signed a contract would not be affected.
The action against Finmeccanica will not create a crisis of spares and after-sales support for the armed forces as the ban does not cover contracts executed by the group.
The Italian group was eyeing military contracts worth almost Rs. 48,000 crore in the Indian market. The potential opportunities included supplying multi-role helicopters to the navy and taking part in the IAF’s Avro replacement programme.
The NDA government appears to be striking a balance between the need to punish defence contractors who may have violated the law and to keep the armed forces battle ready.
The ministry has frozen all contracts with British engineering giant Rolls-Royce (RR) but orders for supply of spare parts for aircraft engines are being approved on a case-by-case basis after assessing urgency, as first reported by HT on July 23.
Six types of planes in the IAF inventory are powered by RR engines — including the newly acquired C-130J Super Hercules special operations aircraft, Jaguar fighters, Embraer luxury jets for VVIPs and Hawk advanced jet trainers. The navy’s Sea Harrier fighters and Sea King choppers also use RR engines.
The Central Bureau of Investigation is probing bribery allegations against the engine maker in connection with contracts to supply engines to state-owned Hindustan Aeronautics Limited.