Business Council
for Cooperation with India

India Plans to Cancel Defense Deals Worth $3 Billion

19 Jun 2017 India
The first such recommendation is for armored recovery vehicles which were contracted with Indias state-owned BEML in 2012 for $275 million. The contract was for 204 WZT-3 made by Polish company Bumar and imported by BEML. The deal is supposed to be scrapped over corruption charges, and lack of indigenization efforts by BEML. Indian Army had purchased 352 WZT-3 in three previous contracts from 1999 to 2005. As state-owned DRDO has developed armored recovery vehicle (ARV) and private firms like L&T are interested in supplying them to the Army, the government may opt for the indigenous ARVs.

Jaitley is also not in favor of purchasing 18 naval multi-role helicopters of Sikorsky S-70B due to prolonged contract negotiation including high cost quoted by the firm in 2014. Indian Navy had issued the tender nine years ago to replace UK's Westland Sea King. Indias state-owned HAL is also working on naval multi-role helicopters and is expected to find support from Narendra Modi government.

"To my mind, it makes little sense because what is intended to be achieved by scrapping these programs and awarding them to the Indian companies can be achieved even by going ahead with them as in either case the Indian companies will need to tie up with the foreign vendors to manufacture the desired platform or equipment in India," Amit Cowshish, former financial advisor to the Indian Defence Ministry, told Sputnik. "This is what Buy and Make category is all about. The government can lay down any conditions it wants the foreign manufacturers to adhere to in regard to the transfer of technology under this category."

The government is also looking to scrap the 300 million euro contract for the purchase of 98 Blackshark torpedoes, manufactured by a Finmeccanica subsidiary, in favor of another contract which will have a Make in India component.
Last month, the Arun Jaitley-led Indias Defense Acquisition Council had scrapped the short-range surface-to-air missile system (SRSAM) in favor of $2.7 billion purchase of DRDOs developed Akash missile. Rafael Advanced Defence Systems with Spyder, Rosoboronexport with Tor M1, and Saab with the Bamse SRSAM were in competition for this contract.

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