This follows observations made by India's attorney general on the legality of issuing tenders and its subsidiary defence companies, which are facing probes on charges of alleged corruption.
In June of last year, MoD announced the cancellation of a $200 million deal for Black Shark torpedoes, but MoD sources said the tender was not formally cancelled and that no intimation of the cancellation was conveyed to the Italian company.
Whitehead Sistemi Subacquei S.p.A., or WASS, was declared the winner over Atlas Elektronik of Germany in 2014 in a global tender to supply Black Shark torpedoes to be mounted on the six French Scorpene submarines licensed produced by state-owned Mazagon Dock Shipbuilders Ltd.
Although WASS emerged as the lowest bidder against Atlas Elektronik, the contract could not be signed because in August 2014, the government put a ban on signing the contracts in the wake of the probe into the VVIP helicopters scam relating to AgustaWestland, another subsidiary of Leonardo.
After coming to power, the ruling Modi government in August 2014 issued a “partial” ban against Leonardo and its subsidiaries according to which ongoing contracts could continue on their path, while all fresh deals remained banned. However, WASS had not signed the torpedo deal.
The latest recommendations of the attorney general to go ahead with the tender from WASS, if accepted by the MoD, could result in a tender for the torpedoes.
An MoD source said that the attorney general has advised the MoD that the contract with WASS should not be cancelled because the Indian Navy cannot find suitable replacements very easily at the same cost, and absence of torpedoes will hit Scorpene submarines' operational capabilities.
Besides, the Indian Navy would need to carry out suitable modifications in the torpedo tubes of the French Scorpene submarines for another type of torpedo, resulting in further delays.
The Black Shark torpedoes, if contracted by the Indian government, will be licensed produced in India with transfer of technology in certain critical areas at state-owned Bharat Dynamics Limited, or BDL, in Hyderabad.
A total of 98 heavy-weight torpedoes are to be procured out of which the seller would quote for 20 torpedoes in fully formed condition, and the remaining 78 torpedoes will be license produced at BDL.