Indian MoD revokes ban on Leonardo SpA

Avatar for KP Sanjeev KumarBy KP Sanjeev Kumar | November 15, 2021

Estimated reading time 3 minutes, 57 seconds.

The Indian Ministry of Defence (MoD) has decided to lift its ban on dealings with Italian defense major Leonardo SpA (formerly Finmeccanica), after the company’s representation in the matter was reviewed by a high-level committee.

India AW101
India signed a contract for 12 VVIP AW101 helicopters from what was then AgustaWestland in 2010. The contract was later terminated amid bribery allegations. AgustaWestland Image

The MoD decision to resume business with Leonardo SpA is “subject to certain conditions imposed on the company,” according to a top government source quoted in The Times of India. As per these conditions, Leonardo cannot make any commercial claims or file any suit against the Indian government for any previous deal.

An updated list of companies prohibited from bidding on Indian MoD contracts was released on Nov. 12, confirming Leonardo’s removal from it.

The ban was imposed in 2014 after allegations of corruption surfaced in the procurement of 12 VVIP Aw101 helicopters from what was then known as AgustaWestland (now Leonardo Helicopters), a subsidiary of Finmeccanica (rebranded as Leonardo SpA in 2016).

The Indian Central Bureau of Investigation (CBI) and Enforcement Directorate is continuing its investigation into the allegations.

The first three of the Aw101 VVIP aircraft had already been delivered, and the first set of crew had completed their training, by the time the allegations surfaced. The three airframes still lie in a mothballed condition at the Indian Air Force’s Palam air base.

One of the first casualties of the blanket ban was the Indian Navy’s procurement case for 98 Black Shark heavyweight torpedoes for its under-construction Scorpene class submarines. A replacement is yet to be found.

The NFH-90 helicopter (produced in part by Leonardo), which had been offered for the Navy’s 16 multirole helicopter program, was another victim.

Leonardo and its subsidiaries produce a wide array of military equipment, including naval guns, missiles, torpedoes, radars, and electronic warfare systems. As per reports, the blanket ban was limiting selection choices in other domains.

While a fresh start with Leonardo SpA may be on the cards, it remains to be seen whether the adverse publicity of the ban will have a lingering impact on dealings between Indian MoD and the company for helicopters.

The Indian MoD’s latest turnaround on Leonardo may ignite fresh debate into the merits of imposing a knee-jerk blanket ban on a defense conglomerate for default by one of its subsidiaries.

Meanwhile, the Indian Air Force has been filling the VVIP helicopter gap by modifying a few of its existing Russian Mi-17V5 helicopters with air conditioning, VIP seats, and customized communication equipment.

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