April 22, 2021
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Mitigating risk
Indian MoD cancels billion dollar MCMV deal

Indian Ministry of Defence has cancelled the multi-billion dollar Mine Counter Measure Vessel (MCMV) deal in view of corruption charges and unsatisfied responses from the South Korean ship building company regarding some specific concerns of Indian Government.

Defence Minister Manohar Parrikar who chaired Defence Acquisition Council (DAC) meeting last month was not convinced with the replies furnished by the South Korean company which had won the tender on the basis of technical parameters.

India and South Korea were in the process of clinching the MCMV multi-billion dollar defence deal which was meant for Indian Navy’s offshore operations and protecting ships in high seas and also at harbors.   

The UPA government had cleared the deal last year in principle when former defence minister A K Antony visited South Korea.

Last year, Indian MoD had already completed the cost negotiations with the Pusan-based Kangnam Corporation, which was found to be the lowest bidder in the tendering process. But the deal has been marred with controversies and allegations.

Although Kangnam was found to be technically qualified as it could defeat its rival Italian firm Intermarine to win the bid, according to MoD sources, the South Korean company never had disclosed whether it has ever hired any agent for the deal.

This has miffed the new Defence Minister who wants transparency and fast track acquisition of weapons and platform for the Indian armed forces who are facing sluggishness in their modernization process.

In fact, the MCMV deal would have facilitated the construction of first two Mine Counter-Measure Vessels at Pusan and the rest six could have been built at the Goa Shipyard through technology transfer and with the engagement of Indian entities.

But Defence Minister Parrikar who always maintains a high moral standard in public life and has promised to rid MoD free of corruption actually smelled a rat in the whole process.

On the top of it, since Parrikar comes from Goa and the MCMV deal was supposed to be implemented at Goa Shipyard Limited, there would have been some allegations later on about the clearance of the deal as the Indian MoD carries a notorious reputation of favoritism.

On the other hand, Indian Navy is facing a daunting task of terrorist threats as some state and non-state actors are trying to destroy naval ships by putting cheap and guided underwater mines which can easily harm the naval platforms.

Recently, Indian Navy had to move some of its high profile ships out of Kolkata port after intelligence reports were received that Pakistani terrorists based in Bangladesh may carry out a maritime terror attack on Indian naval ships.

Thus, the need for MCMV has grown many times. The MCMVs which are made of composite material and high-grade steel to ensure minimal magnetivity, can carry high-definition sonars and acoustic and magnetic sweeps to detect all kinds of underwater threats.

Once the threats are detected it can be neutralized with counter mines and use of remote-controlled systems such as small underwater vehicles to detonate them from safe distances.

Indeed, the MCMV deal has been suffering since 2008 and recently after Italy’s Intermarine, which lost the bid, approached the Central Vigilance Commission (CVC), with issues related to the transparency of the procurement.

In 2007, India sent request for information on advanced MCMV manufacturer to several companies such as Kangnam of S Korea, Intermarine of Italy, Northrop Grumman of US, Izhar of Spain and DCNS of France.

Although Indian Navy wants to go for 24 MCMVs as part of its future acquisition plans, it currently operates 12 aging Pondicherry and Karwar class minesweepers. The cancellation of MCMV deal may have impact on naval operational preparedness at a crucial time.