This "partial ban" — instead of what could have been a "complete" one — was officially notified by the defence ministry on Tuesday. It will come as "a major breather" for Finmeccanica, all dealings with which were earlier put on hold after its UK-based subsidiary AgustaWestland got enmeshed in the infamous VVIP helicopter kickbacks case.
It also marks a shift from the earlier UPA era, under A K Antony as defence minister, where there was "indiscriminate blacklisting" of armament companies after allegations of corruption and bribery. "It often proved counter-productive. The aim now is not to block military acquisitions and spares, even as any wrongdoing is punished," said an official.
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, on the grounds of "operational urgency and national security".
As was first reported by TOI on August 7, attorney general Mukul Rohatgi had advised the MoD that a complete ban or blacklisting of the entire Finmeccanica group, which produces warship guns and torpedoes to helicopters and radars, would jeopardize the battle-readiness of the armed forces.
On Tuesday, the MoD issued a graded set of guidelines for dealings with Finmeccanica:
* It will go ahead with all contracts under execution. Contracts already executed but requiring supply of spares and upgrades on a regular basis will also continue. This means ongoing contracts for manufacture of 76mm warship guns by BHEL under licence from Otomelara, a subsidiary of Finmeccanica, as well as those for Selex radars and electronic systems will continue. Contracts where any Finmeccanica company is a sub-contractor or supplier to the main contractor will also continue. So, Russian upgrades of the Kamov-28 anti-submarine helicopters, where a Finmeccanica company is a supplier, will go-ahead.
* All acquisition cases where Finmeccanica has been declared L-1 (lowest bidder) after competition shall be put on hold till further orders. A special exception for the Rs 1,800 crore project to buy 98 'Black Shark' heavyweight torpedoes for the Scorpene submarines being constructed at Mazagon Docks is likely to be done.
* In an ongoing tender process, in which L-1 has not been declared, Finmeccanica may not be considered if other vendors are available. But Finmeccanica may remain in the fray to supply naval multi-role helicopters to avoid a single-vendor situation.
* A fresh tender or RFP (request for proposal) will not be issued to Finmeccanica if there are other vendors which can provide the same equipment or system. This could rule out Otomelara from participating in the new project for heavy 127mm guns India is now looking for new warships.
As earlier reported by TOI, 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' heavyweight 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.