CBI officials walk out of a building while carrying a bag of documents after conducting a raid as part of probes into the AgustaWestland bribery case in New Delhi
The government today deferred a decision on a deal to buy 197 light-utility helicopters pending completion of an investigation into kickback allegations, the latest setback to efforts to upgrade the country's ageing arsenal. The decision was taken at a meeting of the Defence Acquisition Council (DAC), the highest decision-making body chaired by Defence Minister AK Antony.
A previous tender to buy 197 helicopters for the Army for nearly Rs 3,000 crore collapsed in 2007 after claims of irregularities in the field trials.
The DAC today cleared the purchase of 4,000 thermal imaging sights for T-72 and T-90 tanks and armoured personnel vehicles worth Rs 3,000 crore. The thermal imagers are produced by government-owned Bharat Electronics Limited (BEL) in association with Israel.
Defence deals have drawn heavy scrutiny in recent weeks after Italian police arrested the head of defence group Finmeccanica over allegations that subsidiary AgustaWestland paid bribes to win a Rs 3,600 crore deal to supply 12 luxury helicopters for political VIPs.
While looking into the Finmeccanica deal, Italian investigators said, they found papers suggesting a serving Indian Army brigadier offered to help AgustaWestland win the contract for the 197 helicopter in return for a nearly Rs 27 crores bribe. It is not clear if bribes were indeed paid.
"The 197 helicopters did not come up for discussions today because the Army would like to see that there is an enquiry into some of the allegations made against one of its officers," Sitanshu Kar, a defence ministry spokesman, told reporters.
AgustaWestland did not make the shortlist in the tender. Eurocopter, a unit of aerospace and defence company EADS, and Russian Kamov are competing for the deal. India is considering whether to blacklist AgustaWestland over the VIP deal. It placed six defence companies on a blacklist last year because of corruption allegations.
India plans to spend almost Rs 55,000 crore upgrading its creaking military hardware over the next decade to match its growing economic clout and keep up with neighbours China and Pakistan as they modernise their own defence capacities.
India has emerged as the world's top arms importer, but deal after deal has been held up by graft claims and a tortuous procurement process.
Faced with a political storm over the Agusta deal, the Congress-led UPA government, which is already battling a host of scams and corruption charges, is looking at an overhaul of the defence procurement and production policy. Towards that end, the Defence Ministry is giving final touches to the new Defence Procurement Policy (DPP) that aims to shift the focus from foreign vendors to the Indian private sector for all future defence systems procurement. The new policy is being viewed as the government's answer to deal with recurrent allegations of bribery and wrongdoing by foreign weapon systems manufacturers. It also aims to strengthen the Indian private sector by assuring them of procurement orders and reduce the dependence on foreign vendors.
Rough edges, which include increasing the existing Foreign Direct Investment (FDI) cap in defence sector from 26 per cent to encourage the private sector to tie up with foreign manufacturers to acquire critical technology, issues of licensing, intellectual property rights, are likely to be ironed out in the next fortnight. "We expect to have the new policy ready by April 20," a senior official told NDTV.