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India penalises Israeli defence firm for contract breach
by Staff Writers
New Delhi (IANS) Apr 17, 2012

Indian Army fast-tracks air defence guns' purchase
New Delhi (IANS) Apr 17 - Exactly a month after army chief Gen. V.K. Singh highlighted gaps in the country's defence preparedness in a letter to Prime Minister Manmohan Singh, India decided to fast track purchase of air defence guns for its forces and has called for information from global firms in this regard. Gen. Singh had written to the prime minister on March 12 and on April 11, the army's air defence directorate issued a Request for Information (RFI) to air defence gun manufacturers seeking details of their products so that a tender document could be prepared. Gen. Singh had said in his letter that 97 percent of the air defence guns in the Indian Army inventory were obsolete.

"The army air defence directorate has issued the RFI, as it plans to procure air defence guns having a caliber of more than 30mm," an officer in the army headquarters said here Friday. "This RFI has been issued with a view to identify probable vendors who can undertake the said project. The original equipment manufacturers/vendors have been requested to forward information on their product which they can offer the Indian Army," the officer added. The air defence guns that the army is looking for should be capable of engaging air targets during both day and night, with or without a fire control system, and should be transportable by broad gauge rail rakes.

For the first time in its history, India has imposed a penalty on a foreign defence vendor for breach of contract in the establishment of a plant for manufacturing bi-modular charges for the Indian Army's 155mm howitzers at Nalanda ordnance factory in Bihar.

An official said Monday that the defence ministry earned a cool Rs.227 crore as penalty from a bank guarantee provided by the Israeli Military Industries (IMI) that had signed the Rs.12 billion ($260 million) contract for setting up the factories in Nalanda.

The IMI was a couple of months ago banned from participating in any tender of the Ordnance Factory Board (OFB) following the Central Bureau of Investigation (CBI) recommending that it be blacklisted along with three other global and two Indian firms after their names figured in a graft case filed against former OFB director general Sudipto Ghosh in 2010.

Under the Nalanda factory contract, IMI had signed an 'integrity pact' under which it had promised not to indulge in any malpractice.

"This integrity pact had been breached and hence the defence ministry encashed the bank guarantee given by the IMI," the official said here.

This information was given by the OFB officials to Defence Minister A.K. Antony at a review meeting of their performance and functioning at the South Block here.

He was also informed that the OFB has now tied up with the Defence Research and Development Organisation (DRDO) for indigenising the bi-modular charges that have already undergone trials.

"Nalanda factory will become operational this year. A pilot batch of the bi-modular charges have already been assembled at the factory in association with the DRDO and will be offered to the army for trials shortly," the official said.

"The plant for bulk production will be set up by OFB itself through indigenous resources at a lesser cost," he added.

The meeting is part of a series of such review that Antony has been holding with officials of the ministry, three services, defence public sector undertakings and others.

The meetings have been taking place in the backdrop of army chief Gen. V.K. Singh alleging that a retired lieutenant general had offered him a Rs.14 crore bribe to clear an order for 600 military trucks.

Following the army chief's revelation, Antony ordered a CBI probe into the bribe offer.

In the wake of the CBI probe, Antony assured the OFB officials at the review meeting that "honest officers have nothing to fear" and that they will get the full support of the ministry.

Antony also asked the officials to complete implementation of the OFB's Rs.15,764-crore modernisation and capacity augmentation plan for the 12th five-year plan (2012-17), as against Rs.2,953 crore in 11th plan (2007-12), on time. He also asked them to meet targets on producing quality products for the armed forces.

At the meeting, the major projects sanctioned by the government in the recent past too were listed.

The government has given its nod for investment proposals for augmentation of capacity for T-90 tanks from 100 to 140 tanks amounting to Rs.971 crore, for large calibre weapons for Rs.378 crore, and spares for overhaul of T-72 and T-90 tanks at an expenditure of Rs.368 crore.

Source: Indo-Asia News Service

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