As was first reported by TOI on August 7, the country's top law officer, attorney general Mukul Rohatgi, had advised the government that "a complete ban" on Finmeccanica, which is supplying a large number of weapon systems, radars and ammunition to the Indian armed forces, would jeopardize the battle-readiness of the armed forces and impinge on national security.
As per the defence ministry order on Tuesday, contracts underway with Finmeccanica will not be stopped. Neither will those procurement cases where the contracts have already been executed but spares and upgrades are still required.
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The MoD also said cases in which a Finmeccanica company is a "subcontractor or supplier to a contracting party with the government of India" will go ahead as usual.
But all such acquisition cases where Finmeccanica companies have been declared the L-1 (lowest bidder) but the contract is yet to be inked, "shall be put on hold until further orders".
"Where the tender process is ongoing but no vendor has been declared as L-1 as yet, the Finmeccanica group of companies may also not be considered in the tender, provided the tendering can be satisfactorily completed with other competitors," said the MoD.
Moreover, a Finmeccanica company will not be able to bid or enter the competition in procurement cases where the tendering process is yet to commence. All these guidelines are more or less in tune with the attorney general's opinion, as was reported by TOI.
MoD had put all acquisition cases connected to the Finmeccanica group, ranging from warship guns and torpedoes to helicopters and radars, on hold till it received the AG's opinion. India had scrapped the 556-million-euro contract for the 12 VVIP helicopters on January 1, bribery allegations in which are being probed by the CBI.
CREX-B Micro UAV (unmanned aerial vehicle) (L) and the ASIO Vertical Take-Off and Landing mini UAV (R) displayed in the Finmeccanica stand at the Farnborough air show in Hampshire, England
This is the second such case after the Narendra Modi government ruled out blacklisting of global engine manufacturer Rolls-Royce, which too is under CBI scanner for allegedly employing agents and paying hefty commissions, on the grounds of "operational urgency and national security".
The country's defence establishment feels "indiscriminate blacklisting" of armament companies is proving "counterproductive" and adversely impacting the country's operational military readiness.
"The Army, for instance, has not inducted even a single 155mm artillery gun since the Bofors case of the late 1980s. The aim should be to streamline the cumbersome defence procurement policy and plug the loopholes," said a top officer.
As earlier reported, one estimate holds Finmeccanica, apart from ongoing contracts like the supply of Selex radars or Otomelara naval guns, is in contention for Indian military contracts worth over $6 billion. The crucial ones include the Rs 1,800-crore project to buy 98 'Black Shark' heavy-weight torpedoes, manufactured by another Finmeccanica subsidiary Whitehead Alenia Sistemi Subacquel (WASS) for the six Scorpene submarines being built at Mazagon Docks in Mumbai.
Another case is for the procurement of naval multi-role helicopters (MRHs), with the contenders being European NH-90 choppers, which have Finmeccanica as a partner, and the American Sikorsky-70B choppers. The first contract for the 16 MRHs is to be followed by a bigger one for 123 helicopters at a cost of over $3 billion.
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