US $4 billion Indian Artillery Deal in Limbo Following Rheinmettal Ban

Some of India’s major defense procurement deals have hit a roadblock following the Indian MoD's decision to ban Israeli Military Industries (IMI) and Germany's Rheinmettal for 10 yeas over corruption charges. Major deals like the procurement $4 billion worth of 155mm wheeled howitzers have hit a roadblock since Rheinmettal was considered ahead in the race to win the bid against Konstrukta of Slovakia. Now with Rheinmettal's bid in cold storage, the only vendor remaining is Konstrukta upon whom too there are doubts as the barrel of its artillery gun reportedly exploded during trails. Regardless of the barrel issue, the procurement is left to just one vendor and the Indian system does not allow for a single vendor. Indian authorities have also frozen IMI’s $24 million deal with Indian’s Ordnance Factory Board (OFB) to set up five factories to produce 155mm Bi-Modular Charge Systems for artillery ammunition and other propellant charges for large-caliber artillery operated by the Indian army. The Indian ban has impacted the Israeli government's efforts to privatize IMI, according to reports in the Israeli media. The potential of IMI to obtain a good price at sell-off is now in doubt as India is considered one of its biggest customers. While officially, there is no other deal other than the OFB factories project with IMI in India, the company is said to be present in several procurement projects given the breadth of its products profile. IMI is into armoring of land vehicles, ammunition charges, light artillery rocket system, helicopter and aircraft protection systems among others. Meanwhile, Rheinmettal and IMI have have protested their ban. In a statement, Rheinmettal said that it was "willing to work closely with the Indian authorities to resolve the issue" while IMI expressed "surprise" at the ban. Rheinmettal has planned a big display of its products at the Defexpo India 2012 show in Delhi from March 29 but the ban may invite some embarrassing questions from the media, defence officials and business visitors.