Govt puts on hold many defence purchases

Defence Ministry seeks attorney general's opinion

The defence ministry has put on hold several planned acquisitions involving Finmeccanica—the Italian parent company of scam-tainted AgustaWestland, which supplied the controversial VVIP choppers—and sought the opinion of the Attorney General.

“Further processing (of the procurement programmes) will be retarded till the opinion of the Attorney General is received,” said sources in the ministry here on Tuesday.

The departments of defence and defence production issued separate circulars saying all procurement or acquisition cases in the pipeline with the Finmeccanica group of companies, as well as its subsidiaries and affiliates, should be put on hold.

Defence Minister Arun Jaitley had decided about two weeks ago to let the government take stock of the legal issues involving the company, since it decided to take on the company in a court case and also agreed for arbitration involving the VVIP choppers.

Last week, the defence ministry had asked the Indian Embassy in Rome to provide details on reports suggesting that the Italian prosecutors had shelved proceedings against arms major Finmeccanica in the scam over the Rs 3,727-crore (€556-million) deal to procure 12 VVIP helicopters for India. 

In a statement, Finmeccanica has claimed that the Italian prosecutor discontinued the investigations relating to the VVIP chopper contract signed in 2010.

The halt on the acquisition is sure to impact several naval projects, including indigenous aircraft carrier Vikrant, which is under construction at Cochin. The Navy had contracted Selex ES, a Finmeccanica group company, to supply 3D L Band Air Surveillance Radar (RAN-40L) for the 40,000-tonne vessel.

AgustaWestland was one of the two short-listed firms in a Rs 5,400-crore ($1-billion) contract to buy 16 multi-role helicopters to replace the old Sea King-42A platform. Production and maintenance of Oto Melara guns for the warships may also be hampered.