Oto Melara has been short-listed to supply 127mm naval guns to the Indian Navy as India’s new defense minister pushed the deal forward despite a fraud probe against the firm’s parent company, Finmeccanica, an Indian Defence Ministry source said.
Indian Defence Minister Manohar Parrikar’s stand against the blanket blacklisting of overseas defense companies was instrumental in the Defence Ministry’s selection despite the probe against Finmeccanica and subsidiary AgustaWestland, an MoD source said.
The writing of the contract will take a few months after procedural clearances.
Oto Melara emerged as the sole bidder in the naval gun tender of 2013 because the UK’s BAE Systems did not respond.
Parrikar sought to complete the tender to meet the Navy’s needs, and decided not to debar the Finmeccanica group company, accepting the single-vendor bid of Oto Melara, said the MoD source.
Last July, the previous defense minister Arun Jaitley, now the finance minister, imposed a partial ban on Finmeccanica and its umbrella companies in the wake of a probe by India’s anti-fraud investigating agency, the Central Bureau of Investigation, into the 2010 VVIP helicopter deal with AgustaWestland.
Parrikar took advantage of the July order on technical grounds to short-list Oto Melara, the source added.
The partial ban imposed in July said that if a Finmeccanica group company emerged as the lowest bidder, the tender cannot be awarded to that company if it can be negotiated with other bidders. Because there were no other bidders in this case, MoD took the position that the tender then could be given to Oto Melara, the source added.
According to the tender, two guns will be directly supplied by the original equipment manufacturer and the remaining 11 will be license-produced by state-owned Bharat Heavy Electrical Ltd. (BHEL).