New Delhi:
India will continue to buy weapon systems and hardware from Italian defence equipment firm Finmeccannica, which, along with its subsidiaries, has been accused of paying huge kickbacks to clinch a Rs 3650-crore defence deal to supply VVIP helicopters.
But the defence ministry has clarified that Finmeccannica won't be considered for any new projects or acquisitions.
The 12 helicopters, meant to ferry VVIPs like the Prime Minister and the President, were made by Britain-based company AugustaWestland, a subsidiary of Finmeccannica. India had put on hold all purchases from the Italian firm in the wake of the alleged scam.
In a well-calibrated move that marks a clear shift from the UPA government's policy, the Ministry of Defence said that it won't stop Finmeccannica's involvement in ongoing defence projects and as a sub-vendor in contracts of others companies.
Following the allegations of bribery, the CBI registered a case against 13 people, including former Indian Air Force chief SP Tyagi, in 2013.
Finmeccannica supplies critical equipment for India's defence sector; among them is the propulsion system for the indigenously made aircraft carrier - INS Vikrant - that is expected to join the Navy by 2018, Sea King Helicopters, Heavy Torpedos, Selex Radars used by both the Air Force and the Navy and 76 mm Naval Guns.
A blanket suspension on sourcing supplies, spares and weapon systems would have critically affected the Army's capabilities.
The Italian government holds 30 per cent stake in Finmeccanica and the firm is involved in defence projects worth Rs 30,000 crore in India.
In a detailed order, the MOD said, "In case contracts are under execution, these will be proceeded with and the company can do its work as usual. In case the contract has already been executed, but spares, upgrades are still required on a regular basis, the contracts would be honoured."
It added, "In case the tender had been opened and Finmeccannica had been declared as the lowest bidder, all procurement/acquisition cases shall be put on hold until further orders".