India has cancelled a $5bn project to build 12 minesweeper warships in collaboration with a South Korean firm over a “deadlock” in procurement negotiations.
South Korea’s Kangnam Corporation had been chosen as a single vendor to provide the design and technology for 12 mine countermeasure vessels (MCMVs) to the state-owned Goa Shipyard (GSL).
However, former Indian defence minister Manohar Parrikar said the deal had been officially terminated because Kangnam Corporation did not agree to India’s procurement requirements.
“There was some difference between the request for proposal floated and the quote given by the Korean company,” he said.
“Kangnam Corporation was demanding over $1bn for design and technical know-how of the MCMVs and despite year-long negotiations, refused to accept the requisite norms including intellectual property rights and production support guarantees.”
MCMVs are specialised warships employed to detect and destroy underwater mines that can potentially disrupt maritime trade.
In 2005 the Indian Navy requested 24 MCMVs to guard the east and west coasts, after a parliamentary report warned that the navy was struggling to scale up its mine warfare capability.
Currently they only have four 30-year-old MCMVs in service, which are to be decommissioned between 2018 and 2020, according to the Ministry of Defence.
In 2016, Kangnam Corporation was shortlisted as a single vendor to provide technology for India’s MCMVs because the country did not possess expertise to build the vessels.
The construction of the first vessel was supposed to begin in April 2018, with all 12 deliveries to be completed between 2021 and 2026.
However, in 2017 Rear Admiral Shekhar Mital, Goa Shipyard chairman, told the Hindustan Times that the deal had hit complications and the two were working to resolve the issues.
Parrikar said Goa Shipyard would now issue a new global tender seeking technology to build the MCMVs.
He said the invite would be issued to Kangnam Corporation, Italy’s Intermarine, Spain’s Navantia, Lockheed Martin in the US, Germany’s ThyssenKrupp and Russian shipyards to kick-start a multi-vendor competition.
Meanwhile, a March 2017 parliamentary report on the declining levels of naval force warned that India would be without a single minesweeper in 2021 even if the Korean deal went through.
Mital said the latest setback means that there may be no minesweepers even beyond 2021.
“The timeline will have to be revised. This has certainly upset our calculations,” he said.
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