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Home / India / A Rs 600-cr defence scam waits to burst

A Rs 600-cr defence scam waits to burst

The MoD which avoided floating a global tender to buy gun components from a Hyderabad-based PSU, is being criticised as being "dubious", reports Rahul Singh.

india Updated: Sep 26, 2007, 03:55 IST
Rahul Singh
Rahul Singh
Hindustan Times

A Rs 600-crore artillery gun components deal is facing a lot of questions about its transparency. The defence ministry’s decision to source 80 per cent of electronic fuses for artillery guns from a Hyderabad-based PSU, Electronics Corporation of India Limited (ECIL), which reportedly uses South African technology, is being criticised as being “dubious.”

Only 20 per cent of the 11 lakh fuses required for 155 mm, 130 mm and 105 mm artillery guns are being procured through competitive bidding.

With the MoD preferring not to float a global tender, there’s been a wave of allegations that it has compromised the provisions of the Defence Procurement Policy that seeks to eliminate the scope for manipulating the selection of military equipment.

Sources said the ministry had decided in 2005 to issue a global tender for procuring 50 per cent of the fuses from vendors other than ECIL. It has since done a turnaround.

A senior MoD official told


: “The army is satisfied with these fuses. We can source greater quantity through competitive bidding in the coming years if other vendors meet our requirements.” But others in the ministry are asking as to why the government isn’t keen to develop a secondary source of supply?

“Heavy reliance on a single source is risky. What if the supplier cannot meet the requirements for large scale production if there’s a war?” asked a bureaucrat.

The MoD has, however, assured that it will diversify future procurement. But several politicians, including MPs, are exerting pressure on it to rework the procurement for transparency.

Manvendra Singh, Congress MP from Mathura, has fired off letters to the Central Vigilance Commission (CVC) and

Defence Minister AK Antony underlining irregularities. He told HT, "There are other players, like ITI Rae Bareilly, who have the technology to build these fuses. Why have they been overlooked?"

He accused the ECIL of hiring top generals on the verge of their retirement as a reward for helping it retain its monopoly in defence deals. The MoD is believed to have asked the ECIL to explain the motive behind recruiting two former directors general of artillery.

ECIL Chairman and Managing Director KS Rajasekhara Rao, defending the contract, told


from Hyderabad: "We proved our reliability during the Kargil war when we increased production from 5,000 units per month to 30,000. R&D work on the fuses began four decades ago. Such expertise cannot be matched." He claimed the product had been indigenised "but we do get fuses from foreign suppliers to compare technology." Rao said the retired generals had nothing to do with the fuses division and were supporting the ECIL in other areas of business.

Given that the domain of defence contracts is notorious for murky wheeling and dealing, sources said it would only be apt for the government to get independent monitors to vet the deal.

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