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Oto Melara Barred From Indian Navy’s Gun Tender

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An-Oto-Melara-gunNEW DELHI — Italian company Oto Melara will not be permitted to participate in a $400 million global tender issued recently by the Indian Navy for 110 30mm naval guns because of an ongoing probe into charges of corruption against its parent company, Finmeccanica, a source in the Ministry of Defence (MoD) said.
The tender issued under the “Buy and Make” category has been sent to Israeli companies Rafael and Elbit, South Korea’s Samsung Techwin, and British companies BAE Systems and EM Digital.
“Since it was competitive bidding, Oto Melara could not have been allowed as per government policy,” a Navy official said.
Prime Minister Narendra Modi’s government said after coming to power in May 2014 it would do no further business with Finmeccanica companies pending a final opinion by India’s legal authorities in the case against the Italian group. Finmeccanica’s AgustaWestland stands charged with corruption in connection with India’s purchase of VIP helicopters worth $640 million in 2010, an MoD official said, and a probe by India’s Central Bureau of Investigation is ongoing.
The Indian probe continues despite the fact that the Italian investigation that prompted it ended in the aquittal at trial of AgustaWestland’s then-CEO Giuseppe Orsi, who later became Finmeccanica’s CEO, on corruption charges.
The Indian decision put on hold a long-pending deal worth $300 million for the purchase of 98 Black Shark heavyweight torpedoes, manufactured by Finmeccanica’s Whitehead Alenia Sistemi Subacquei (WASS) and urgently required for the six French-designed Scorpene submarines being built for the Indian Navy at state-owned Mazagon Docks in Mumbai.
“When various companies are able to offer a product to India, Finmeccanica companies are currently excluded from bidding,” an Italian source said. “But if only two companies can offer a product, one of which is a Finmeccanica company, then it is admitted for the sake of competition. For smaller-caliber cannons there are numerous contenders.”
The tender for the 30mm naval guns was issued in March 2013 but no overseas vendor participated because there was a condition of transfer of gun barrel technology to state-owned Bharat Heavy Electronics Ltd. (BHEL), which will produce the guns under license, the Indian Navy official said.
“The condition for transfer of technology of the gun barrel has been removed in the latest tender issued last week and we expect a good response from overseas companies now,” the Navy official added.
Another Navy official said Oto Melara’s participation would have been preferred because India is already using 76mm naval guns license-produced by BHEL under license from the Italian company, and Oto Melara’s gun technology is “superior.”
Delay in acquiring the 30mm naval guns has led to “frequent overhauls of existing Oto Melara guns,” said Shyam Kumar Singh, a retired Indian Navy captain.
The Navy plans to purchase 110 30mm naval surface guns with electro-optical fire control systems (EOFCS) along with ammunition. The technology transfer will be done in favor of Haridwar-based facility of BHEL, Chennai-based facility of state-owned Bharat Electronics Limited (BEL) will get technology for the integration of the gun system. The ammunition will be license-produced by India’s state-owned Ordnance Factory Board.
“Defence Minister Manohar Parrikar has announced on several occasions that a new defense procurement policy [DPP], which could include policy changes in the blacklisting of overseas companies, will be announced,” defense analyst Nitin Mehta said. “However, the new DPP of the new government is still awaited.”

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