India, Italy discuss lifting ban on Italian defence sector giant Leonardo

Source : Times Now

India, Italy discuss lifting ban on Italian defence sector giant Leonardo
File Photo: Agusta Westland’s AW101 helicopter contracted by India to ferry its top political leadership across the nation in February 2010.

Prime Minister Narendra Modi met Mario Draghi, his Italian counterpart on 29 October. Meanwhile, both countries are working to see if lifting the ban on Leonardo, the Italian defence sector giant, is possible. 

The Indian law ministry is already looking at the relevant papers forwarded to it. India and Italy are in discussions regarding the ban, which happened in the wake of the alleged payoffs to Indian officials in 2006-2007 for the Augusta Westland deal for the purchase of 12 VVIP helicopters. The $33 million scam came to light in 2013. Foreign secretary Harshvardhan Shringla has said discussions between Italy and India are going on 

Augusta Westland began life in 2000 when Finmeccanica and GKN, a British firm, merged their helicopter divisions. Each held 50 per cent of the shares. GKN sold its stake to Finmeccanica in 2004. In 2016, Finmeccanica, now known as Leonardo, restructured and integrated its subsidiaries to become one mammoth firm. A law ministry view is necessary as the case regarding the payoffs is still under CBI investigation.

One argument for lifting the ban is that Leonardo, partially owned by the Italian government, has been restructured and is very different from Augusta Westland, which was a subsidiary. Secondly, there is a suggestion that let the ban, if there has to be one, continue on the helicopter division and not on the rest of the mammoth firm, one of the world’s largest. As a senior official said, “One option made is to continue with the ban on the helicopter vertical, and not the other sections. It would be the equivalent of banning let’s say a Tata firm like Tata Steel if it has done something wrong, but beginning to work with other members of the Group like TELCO or TCS.”

India’s armed forces stand to benefit from the lifting of the ban, whether it is partial or total, not just by acquiring much-needed weapons like Black Shark torpedoes, made by WASS, now owned by Leonardo, but keeping Pakistan out of the picture. The Black Shark torpedo, which the Navy wants goes well with the Scorpene submarines the Indian Navy has. 

Pakistan has been negotiating with Leonardo and is looking at smaller deals. Even a partial clearance would ensure that India has considerable leverage over Leonardo. It could move the firm away from selling small amounts of weaponry to Pakistan, which is keen to buy torpedoes. A six-member delegation led by Pakistan Navy’s Rear Admiral Abdul Samad, chief project director, is in touch with Leonardo’s Torpedo Production Centre in Italy.  

New, much-needed weapons apart, even a partial lifting of the ban will help in getting spares for weapon systems and other equipment. For Leonardo makes missiles, naval guns, unmanned underwater vehicles, and other weaponry.    

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