Antony's Red Flag on Deals to Slow Bullish Successors - The New Indian Express

Antony's Red Flag on Deals to Slow Bullish Successors

Published: 06th April 2014 06:00 AM

Last Updated: 06th April 2014 07:54 AM

India’s 13.1-lakh strong armed forces may be waiting for the new government in May to sign key defence deals, but the Defence Ministry under the present UPA regime seems to be working to make that difficult.

At least three of the five major deals – cumulatively worth over Rs 1.2 lakh crore – that are almost ready and waiting to be signed have been pushed into controversies. The Defence Ministry, under A K Antony, has raised red flags and ordered inquiries into these deals, which could raise a political stink whenever these are signed.

The latest to come under the scanner is the Indian Air Force’s bid to buy six European Airbus-330 MRTT midair refuelers, said to be worth Rs 7,500 crore. The deal was ready to be signed after India had selected the Airbus platform against the Russian Ilyushin-78s tankers in the early part of 2013.

But now, after a Member of Parliament wrote to the Defence Minister complaining that the Airbus is facing a Central Bureau of Investigation probe in a nearly three-decade-old case in a civil aviation deal, Antony has ordered the procurement file for the Airbus-330 MRTT to be sent to the Law Ministry for an opinion, say officials.

This is the second time the midair refueler tender is facing rough weather.

In the case of the pro spective Rs 1-lakh-crore tender for 126 Medium Multi Role Combat Aircraft (MMRCA) too, the deal has come under a cloud after Antony said in February this year that “questions have been raised over the offsets proposals” from French firm Dassault Aviation, the winner of the deal.

The MMRCA deal was almost ready, but could not be signed by the UPA II Government in the 2013-14 fiscal due to a crunch for funds. Now, this combat planes deal would be signed by the next government soon after it takes over in May. But with Antony raising questions over the offsets proposal from Dassault Aviation, the signing of the deal, whenever it happens, would definitely face questions from whichever party is in opposition at the time.

Offsets in defence deals worth over Rs 300 crore would mandate the plough back of at least 30 per cent of the contract amount in the Indian defence, aerospace and internal security industry by the winner of the deal. The offset clause in military deals is an instrument used by governments worldwide to energise their domestic defence industry.

In the case of MMRCA, a 50 per cent offset has been fixed for the tender winner Dassault Aviation. But the proposals made by the company for offset implementation had “discrepancies” that are now being looked into, Defence Ministry sources said.

The third deal to come under a probe in the last few months is the `8,000-crore tender for 197 Light Utility Helicopters (LUH) in which the European Airbus Helicopters’ AS550C3 Fennec is the lowest bidder against Russia’s Kamov Ka-226T.

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