Dec 07: The ministry of defence scrapped the almost finalised deal for the purchase of 197 helicopters worth almost Rs 4000 crores ($ 4 billion) with the European Aerospace and Defence Systems (EADS). The cancellation of the deal showed the diplomatic setback for the European companies but rejoicing for the Americans.
The defence ministry officials had been expressing suspicion about the tender process even as the two companies in the fray – Bell (an American company) and Eurocopter (a French-German-Spanish group) – did not refrain from what they were saying was the deficiencies in their machines.
Soon after Bell was disqualified on technical grounds it started mounting intense diplomatic pressure on India for re-inclusion in the tender process on the ground of unfair exclusion.
Ultimately the government decided to cancel the request for proposal (RFP) for procurement of 197 helicopters for the Indian army,” said Sitanshu Kar, a Defence Ministry spokesperson. Further said, “A fresh RPF will be issued.”
It is to be noted here that the first proposal for the purchase of helicopters was carried out in 2001 for the urgent replacement of the Cheetah and Chetak helicopter, which had been constantly in use for 40 years. The deal was won by the Eurocopter in February this year. But after the objection laid by the Bell the deal was put on hold to examine the allegations against the role of two Generals and a senior bureaucrat for favouring the European company.
As per the unfruitful deal 60 helicopters were to be directly imported and the remaining 137 were to be built by the public sector Hindustan Aeronautics Limited under a transfer of technology agreement. The cost of each helicopter was estimated to be between .80 crore and .90 crore.
Defence ministry sources said the long-drawn field trials, which began in late-2004 after the tender was floated in 2001-2002, were "vitiated" since Eurocopter actually sent the AS350B3 civilian model (with an ARRIEL 2B1 engine) for the trials instead of the AS550C3 military version (ARRIEL 2B engine) it had offered for the contract.
The Army did not seek clearance from Ministry of Defence for the AS350B3 model to be fielded in the trials.
Sources in the ministry said the European company flouted the agreement, as the machine was not the same as it was mentioned in the deal. The Central Vigilance committee also confirmed after enquiry that the rules were flouted.
The direction to re-tender was issued after these investigations.
Sources from the India’s Ministry of Defence confirmed that the selection process is being broadened as several other companies complained that they had not given proper chance to win the contract.
The process of seeking new tenders could set the deal back by several months, even more so.
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