India puts on hold all defence deals with Italy’s Finmeccanica

The defence ministry on Tuesday officially confirmed that all fresh deals with Italian conglomerate Finmeccanica, whose UK-based subsidiary AgustaWestland's sale of helicopters to India for VVIP travel is enmeshed in controversy.

"An an internal circular/advisory has been issued to not further process any acquisition project in which Finmeccanica is in the fray as a vendor till we get the attorney general's opinion on the entire blacklisting issue in the VVIP helicopter case (€556 million contract was scrapped on 1 January)," said a ministry official.

Finmeccanica and its companies are involved in several ongoing defence projects in India, including the supply of Selex radars and communication systems to Navy and IAF as well as Otomelara 127mm guns for warships. Moreover, an estimate holds the conglomerate is also in contention for military contracts worth another over $6 billion.

The projects being kept on hold include the long-pending Rs1,800 crore project to buy 98 ``Black Shark'' heavyweight torpedoes, manufactured by another Finmeccanica subsidiary Whitehead Alenia Sistemi Subacquei (WASS), for the six Scorpene submarines being built at Mazagon Docks in Mumbai.

Similar is the case for procurement of naval multi-role helicopters (MRHs), with the contenders being European NH-90 helicopters, which have Finmeccanica as a partner, and the American Sikorsky-70B choppers. The first contract for 16 MRHs was to be followed by a bigger one for 123 choppers at a cost of over $3 billion.

The department of defence as well as the department of defence production, in separate circulars, have directed the armed forces, defence PSUs, ordnance factories and others to "strictly comply" with the order to put on hold "all procurements / acquisition cases in the pipeline with Finmeccannica group of companies, including its subsidiaries and affiliates".

All departments have also been asked to stop any dealing with the firms named in the VVIP helicopter case FIR, including AgustaWestland, IDS Tunisia, IDS Mauritius, IDS Infotech (Mohali) and Aeromatrix Solution Ltd (Chandigarh), which was registered by the CBI in March 2013.

While the defence ministry decided not to blacklist global engine manufacturer Rolls-Royce after receiving an opinion from the government's top law officers, it is now awaiting similar advice in the VVIP helicopter case. The call on whether to blacklist the entire Finmeccanica group or just AgustaWestland will then be taken.