Oto Melara To Supply Indian Naval Gun

Oto Melara has been short-listed to supply 127mm naval guns to the Indian Navy as India's new defense minister pushed the deal forward despite a fraud probe against the firm's parent company, Finmeccanica, an Indian Defence Ministry source said.

Indian Defence Minister Manohar Parrikar's stand against the blanket blacklisting of overseas defense companies was instrumental in the Defence Ministry's selection despite the probe against Finmeccanica and subsidiary AgustaWestland, an MoD source said.

The writing of the contract will take a few months after procedural clearances.

Oto Melara emerged as the sole bidder in the naval gun tender of 2013 because the UK's BAE Systems did not respond.

Parrikar sought to complete the tender to meet the Navy's needs, and decided not to debar the Finmeccanica group company, accepting the single-vendor bid of Oto Melara, said the MoD source.

Last July, the previous defense minister Arun Jaitley, now the finance minister, imposed a partial ban on Finmeccanica and its umbrella companies in the wake of a probe by India's anti-fraud investigating agency, the Central Bureau of Investigation, into the 2010 VVIP helicopter deal with AgustaWestland.

Parrikar took advantage of the July order on technical grounds to short-list Oto Melara, the source added.

The partial ban imposed in July said that if a Finmeccanica group company emerged as the lowest bidder, the tender cannot be awarded to that company if it can be negotiated with other bidders. Because there were no other bidders in this case, MoD took the position that the tender then could be given to Oto Melara, the source added.

According to the tender, two guns will be directly supplied by the original equipment manufacturer and the remaining 11 will be license-produced by state-owned Bharat Heavy Electrical Ltd. (BHEL).

"The clear cut stand against blacklisting of overseas defense companies on alleged corruption charges will enthuse overseas companies to participate keenly in Indian defense programs," said defense analyst Nitin Mehta. "There should be a clear cut policy on dealing with overseas companies found guilty of using kickbacks to swing deals and blanket blacklisting these companies is not the answer," Mehta said.

A Navy official said the 127mm gun made by Oto Melara is much needed and has a firing range of up to 100 kilometers. The Italian company also will transfer technology for the license production of the guns to BHEL, with which it is already manufacturing 76/62mm naval guns.