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Ministry of Defence scraps Rs 32,000-cr minesweeper deal with South Korean firm citing 'commercial complications'

At the time when government has been pushing for 'Make in India' in the defence sector, the Centre has scrapped the Rs 32,000-crore project to build 12 advanced minesweepers (MCMVs) with a South Korean company, The Times of India reported.

Advanced minesweepers are specialised warships which detect, track and destroy underwater mines along the coasts. MCMVs have very low acoustic, magnetic, electrical and pressure signatures.  These vessels are designed to have high shock resistance against underwater explosions.

Hindustan Times reported that the negotiations between Goa Shipyard Limited (GSL) and South Korea-based Kangnam Corporation fell apart in the final stage.

“We were unable to resolve commercial complications despite our best efforts. This particular deal with the Koreans is off,” GSL chairman Rear Admiral Shekhar Mital (retd) was quoted by Hindustan Times as saying.

The Times of India added that the South Koreans wanted some changes in the original tender for the project. The report also said that there were problems with the terms related to transfer of technology.

The Times of India reported that the Ministry of Defence directed GSL to restart the tender process for the minesweepers.

Thanking Defence Minister Nirmala Sitharaman for the "quick decision", Mittal told The Times of India that the latest tender will help expedite the project.

The Centre will soon issue another Expression of Interest (EoI) for the minesweepers to Kangnam, Italy-based Intermarine and other foreign companies.

Nevertheless. this is not the first time that Kangnam has come under the scanner of the Indian government.

File image of Defence Minister Nirmala Sitharaman. AFP

File image of Defence Minister Nirmala Sitharaman. AFP

Hindustan Times reported that the government had scrapped a similar contract with the company in 2014 amid corruption allegations.

Had the latest deal been finalised, work on the project would have started in April 2018. The delivery of the 12 minesweepers, on the other hand, would have begun in 2021.

However, with latest deal falling apart, India could be without a minesweeper even beyond 2021, Hindustan Times reported. With a 6,000-kilometre-long coastline, India needs at least 24 minesweepers on the eastern and western coast.

Minesweepers become imperative in the larger context of India's maritime security. As noted by media reports, China has been deploying its submarines in the Indian Ocean Region, where India too is a major player. Moreover, these submarines have the capability to quietly lay mines, thus endangering India's maritime interests.

It is to be noted that the Indian Navy had decommissioned two of its oldest minesweepers — INS Karwar and INS Kakinada — after 30 years in service.

With the decommissioning of the two minesweepers, the navy is now left with a fleet of four Soviet-origin minesweeping ships will also be decommissioned by the end of 2018.

A parliamentary standing committee on defence recently criticised the government on the issue and asked it to make efforts to fill the gap in the navy's capability. The worring gap in the operational capacity of the Indian Navy prompted the government to look for more vessels.

Nevertheless, the 'Make in India' project seems to be only on paper as an October 2017 report in The Times of India noted that over half a dozen projects are stuck at various stages of negotiation due to procedural delays and political apathy.

With inputs from PTI

Updated Date: Jan 08, 2018 13:29 PM

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