Politics

Neither UPA, Nor NDA Could Afford a Complete Ban on AgustaWestland and Finmeccanica

The scam had first come to light in 2012 when the defence ministry had put on hold all prospective deals with Finmeccanica after its subsidiary AgustaWestland had breached the pre-contract integrity pact.

Since blacklisting the company would have have cast a shadow on all or most of these deals, both the governments had imposed restrictions on a prospective basis only. Credit: http://no.agustawestland.com/

Since blacklisting the company would have have cast a shadow on all or most of these deals, both the governments had imposed restrictions on a prospective basis only. Credit: http://no.agustawestland.com

New Delhi: Though India had terminated the 3,726-crore rupees, scam-ridden VVIP chopper deal with AgustaWestland International Limited on the grounds of breach of pre-contract integrity pact (PCIP), neither the then UPA government, nor the Narendra Modi government banned Finmeccanica – the parent arm of the UK-based supplier – from carrying forward its ongoing projects in India.

So while the Congress and the BJP traded barbs on the issue on April 27 – with the latter trying to drag Congress president Sonia Gandhi into the controversy in Rajya Sabha, and Congress retaliating through spokesperson Randeep Singh Surjewala by asking why Prime Minister Narendra Modi did not “blacklist AgustaWestland” when the UPA government had initiated ‘‘the process of blacklisting’’ it – the fact remains that neither governments actually wanted to press the issue.

The scam had first come to light in 2012 when the defence ministry had put on hold all prospective deals with Finmeccanica after its subsidiary AgustaWestland had breached the PCIP. It was then revealed that nearly 360 crore rupees were paid in kickbacks to Indian Air Force officers and others by AgustaWestland for securing the contract.

Then in February 2013, the Central Bureau of Investigation (CBI) instituted a probe after Finmeccanica chief Giuseppe Orsi was arrested by the Italian police in connection with the VVIP chopper scam. A regular case was then registered by the CBI against former IAF chief S.P. Tyagi, and 12 others, including his three cousins.

In the same month, the defence ministry had frozen the payments and decided to scrap the contract for supply of 12 AW101 three-engine helicopters for VVIP use. The termination of the contract was finally announced on January 1, 2014. Subsequently, India had recovered all the money paid by it to the company.

Though the UPA government had barred Finmeccanica from future contracts – in the wake of public pressure to act firm against the and its subsidiary AgustaWestland – it had not blacklisted it outright as that would have impacted the ongoing projects.

Defence experts also insist that banning big conglomerates dealing with weapon systems can reduce the number of bidders for various projects, thereby taking their costs higher.

The move could have also impacted the process of modernisation of the Indian armed forces. Then external affairs minister Salman Khurshid had admitted, “We don’t want to overreact because we don’t want to let this issue affect our defence preparedness.”

Another reason why India has been soft on the parent company is because its subsidiaries are involved in manufacture and sale of either components or complete weapon systems which the country has been eyeing for outright purchase or joint development.

Some of the key projects involving various arms of Finmeccanica which were under consideration or works in progress included purchase joint development of Rafale jets with Dassault Aviation of France; air surveillance radars from Selex ES for the Indigenous Aircraft Carrier; upgrade of torpedoes for 13 submarines by WASS, offer of NH 90 Multi-Role Helicopters (MRH) for the Navy; joint development of reconnaissance aircraft program; joint development of C-27J medium-sized airlifter; assembling of AW 119 helicopters with Tata Sons; and supply of 76 mm naval guns. Apart from this, Finmeccanica subsidiaries were also engaged in railway signalling and traffic management projects.

Since blacklisting the company would have have cast a shadow on all or most of these deals, both the governments had imposed restrictions on a prospective basis only.

However, the Congress is right when it points out that Modi relaxed the norms for the Make in India programme. The restrictions were indeed lifted by the Modi Government in April last in order to promote the campaign.

The main reason for the change in stance was that the government wanted the agreement with AgustaWestland for supply of 100 light utility helicopters for the Navy to move forward. The company had fielded its AW-109 choppers for this deal under the “Buy and Make in India” category.