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November 19, 2014

India Removes IMI From Blacklist


India has quietly lifted a ban on Israeli Military Industries (IMI), paving the way for negotiating new defense projects with the Israeli company, a Defence Ministry source said.

The MoD has not publicly announced the lifting of the ban, imposed in 2009, but communicated its decision to IMI in September, the source said.

No Indian MoD official would confirm the lifting of the ban, nor would any diplomat of the Israeli Embassy comment. IMI officials in Israel declined to comment on the report.

The former Indian United Progressive Alliance government imposed the ban after alleged corruption charges, but India’s anti-fraud agency, the Central Bureau of Investigation (CBI), could not prove the charges against IMI, the source added.

IMI was accused of bribing officials from the government-owned Ordnance Factory Board (OFB) to win a deal for producing 155mm ammunition at OFB’s Nalanda factory.

With the ban removed, the MoD intends to explore new defense projects with the Israeli company, the MoD source said. These could include partnership in the design and development of the proposed homemade future main battle tank and setting up a facility to jointly manufacture a variety of ammunition, especially for 155mm guns, the MoD source said.

IMI had been a frontrunner in the tank design project.

Amid charges of alleged corruption, MoD canceled the $350 million tender IMI had won to manufacture a bi-modular charge system for 155mm guns to be built by the OFB.

However, the blacklisting of IMI led to a shortage of ammunition for the 155mm guns. Retired Gen. V.K. Singh, former Indian Army chief and now minister of state for external affairs in the Narendra Modi government, informed former Defence Minister A.K. Antony in a letter of “critical shortages” of a variety of ammunition.

The OFB is not able to meet all the Army’s ammunition requirements, and India is dependent on Russia to supply many kinds of ammunition.

In addition to IMI, in 2009 India blacklisted Singapore Technologies, Rheinmetall Air Defense and Corporation Defence of Russia on charges of corruption.

In August, the Modi government lifted a ban on Denel after India’s CBI failed to prove charges of corruption against the South African company, nine years after the ban was imposed in 2005. Denel was accused of paying kickbacks to secure a deal with the Indian Army in 2002 to supply 1,000 anti-material rifles and ammunition.

The blacklisting of Denel stalled several Army projects, including the purchase of 155mm/52-caliber artillery guns as Denel was the front runner in the program, which was canceled immediately after the blacklisting in 2005.

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