Defence ministry rethink on blacklisted firms?

New Delhi, July 7 : The defence ministry has sought advice from the Central Vigilance Commission (CVC) and the law ministry on further dealings with the seven foreign armament companies, including an Israeli firm and a Singaporean gun manufacturer, blacklisted on suspicion of thier involvement in payoffs.

The ministry has also written to the Central Bureau of Investigation (CBI) for further evidence in the case.

'Advice has been sought from the CVC and the law ministry on the further action to be taken in the case and future dealings with the firm,' a defence official said, requesting anonymity.

'The ministry has written to the CBI seeking details of the case and the role of the blacklisted firms,' he added.

Dealings with the seven companies were 'temporarily put on hold' June 5 after their names surfaced in a CBI case against the retired chairman of the Ordnance Factory Board, Sudipta Ghosh.

The defence ministry's latest move is being seen as a fallout of the adverse impact of the blacklisting on the modernisation drive of the Indian armed forces because finding alternative suppliers to critical weaponry like artillery guns has been proving difficult.

'The decision is to put transactions on hold till further orders. We are assessing what is to be done. The order will be reviewed as and when the CBI provides evidence,' the official added.

The immediate casualty of the blacklisting is the Rs.12 billion ($240 million) deal between IMI and the Indian Ordnance Factory Board (OFB) March 25 to revive a munitions factory at Nalanda in Bihar along the lines of IMI's ordnance factory in the Tel Aviv suburb of Ramat Hasharon, a project that had taken off after 10 long years.

'The blacklisting has once again put a question mark on the fate of the factory, which was to be the 40th ordnance factory in the country,' another defence official told IANS, requesting anonymity.

Originally conceived in the late 1990s when George Fernandes was the defence minister, the Nalanda factory project went into limbo when South African defence major Denel, that was to collaborate in its construction, was blacklisted on corruption charges. The factory was to manufacture the propellant for the ammunition of the Bofors 155 mm howitzers and also Zitara carbines in collaboration with another Indian ordnance factory.

The Israeli firm had also been supplying Uzi and Tavor submachine guns to the Indian security forces and post the 26/11 Mumbai terror attacks, further orders had been placed for the guns.

IMI had also undertaken a project to manufacture a variation of cluster bombs in a joint venture with the ordnance factory at Khamaria in Madhya Pradesh.

The Israeli firm was also advising the Defence Research and Development Organisation (DRDO) on the development of the indigenous Arjun main battle tank for the Indian Army.

Besides IMI, the blacklisting of Singapore Technology is likely to derail the artillery modernisation programme of the Indian Army that has been hanging fire for over two decades and has been mired in controversy.

Singapore Technology's Pegasus ultra-light howitzer was a leading contender for the Indian Army's order for 140 guns worth Rs.29 billion.

The other blacklisted companies are BVT Poland and Media Architects Pvt. Ltd of Singapore and three Indian companies: T.S. Kishan and Co. Pvt. Ltd., R.K. Machine Tools and HYT Engineering Co.

The CBI had registered a case against the former OFB director general Sudipto Ghosh in Kolkata on May 17 under the Prevention of Corruption Act. The seven companies were mentioned in the First Information Report.