This landmark decision, taken during a meeting of the Union Cabinet Committee on National Security earlier this week, follows a series of representations made by the three armed services to both the Ministry of Defence (MoD) and the National Security Adviser P. Shivshankar Menon, all of which have had the desired effect. Historically speaking, such blanket blacklistings have been legally untenable and indefensible and consequently, the only nett losers have been India’s armed forces. For instance, the Indian Navy’s (IN) Dabolim-based MiG-29K tactical flight simulator, procured from Germany-based Rheinmetall, is today a virtual white elephant. Furthermore, more than 12 principal surface combatants of the IN are in dire need of Barak-1 CIWS installations, which again were postponed indefinitely on the advice of the Central Vigilance Commission. All this has served to pile up enormous pressure on the MoD’s bureaucracy as well as on the presently-serving Raksha Mantri to not jeapordise national security any further by resorting to blanket blacklistings that never seem to have a satisfactory end-state.
It is now believed that blacklistings enforced for the past decade will also be lifted, albeit without any official announcement, with just an official confidential notification being sent by the MoD directly to all the blacklisted OEMs about the discontinuance of their respective blacklistings. All this, however, should not detract the MoD from pressing for liquidated damages from those OEMs that have been proven to act in contravention of their contract obligations, especially with respect to the Integrity Clause. In cases where culpability has been legally established (as in the case of the DENEL Group), and is likely to be established (as is the case with Finmeccanica), the MoD should make all-out efforts to sue such OEMs for contract violation and corporate accounting frauds and claim liquidated damages with compound interest.