The government may consider doing business with the defence suppliers facing a CBI probe, provided it is vital for national security.
A top Defence Ministry official told Hindustan Times on the condition of anonymity, as he is not authorised to speak to the media, that the armed forces would have to clearly prove urgent operational needs for military equipment that can only be supplied by these tainted firms.
He said this was the government’s general policy.
The official said the blacklisting of firms — whose names figured in CBI investigations into alleged kickbacks paid to secure orders — would not hinder the military’s modernisation. “The CBI investigations move at their own pace,” he said.
“Mere registration of an FIR does not legally debar us from doing business with the suppliers if the military can establish urgent national security requirement and there is no other supplier.”
The contracts would be awarded after due approval from the Cabinet Committee on Security.
In the first week of June, the defence ministry had frozen business with seven tainted defence firms. The CBI had named these firms in an FIR against Sudipto Ghosh, former director-general of the Ordnance Factory Board. Ghosh had allegedly received kickbacks to favour these firms.
The ministry official said business with these firms remained suspended pending receipt of the CBI report.
The army was banking on one of the blacklisted firms, Singapore Technologies, for lightweight howitzers that can be swiftly deployed in the mountains. The Singapore-based firm had emerged as a strong contender for supplying its 155mm Pegasus howitzer to the army under a Rs 4,800-crore artillery upgrade plan.
In March, another blacklisted firm, Israel Military Industries (IMI), had bagged a Rs 1,200-crore contract to manufacture propellant charges for Bofors ammunition.
Army chief General Deepak Kapoor has maintained that the ban on defence suppliers could hit artillery modernisation.
The firms blacklisted by the government in June included M/s HYT Engg, Delhi-based M/s T.S. Kishan and Co Pvt Ltd., M/s R.K. Machine Tools, M/s BVT of Poland and M/s Media Architects Pvt Ltd., Singapore.