Indian Navy examining 3000 crore deal with Reliance Defence; Bank guarantee encashed

Last Updated: Tue, Dec 04, 2018 15:29 hrs
Shipping containers are seen at a port in Tokyo, Japan

According to news reports published on Tuesday, the Indian Navy is examining a deal with Reliance Naval Engineering Ltd (RNEL). Navy Chief Admiral Sunil Lanba was quoted as saying in a report that the deal with RNEL was "being looked at and is being examined and what we need to with it."

The Navy Chief was referring to a contract with RNEL for supply of five naval offshore patrol vessels (NOPVs). Gujarat based Pipavav Defence and Offshore engineering had won the contract for the NOPVs in 2011. Pipavav Defence was subsequently acquired by the Anil Ambani group in 2016.

An NOPV undertakes surveillance of Exclusive Economic Zones. These vessels also undertake operational activities such as anti-piracy patrols, fleet support operations and maritime and coastal security operations. The vessels were to be armed with 76mm Super Rapid Gun Mount (SRGM) system.

The original contract said the first vessel would be delivered in early 2015, however this deadline got pushed several times. Last year, reports said Reliance Shipyard in Pipavav, Gujarat had launched two patrol vessels- 'Shachi' and 'Shruti'.

On Tuesday, reporters asked the Navy Chief if the contract with RNEL had been cancelled owing to delay in supply. "It has not been cancelled at the moment but the contract is being looked at and is being examined and what we need to do with it," said the Navy chief.

There were also questions on the possibility of preferential treatment to RNEL.

Speaking at the press conference around the Navy Day celebrations, Admiral Lanba refuted thoughts of bias against RNEL. "There is no preferential treatment being given to RNEL. Its bank guarantee has been encashed. Punitive action has been taken against it. The process is being taken forward," he said.

According to Admiral Lanba, the value of the deal for five offshore patrol vessels was Rs 3000 crore. A PTI report said that bank guarantees were estimated at 10% of the size of the contract.

An official response from RNEL on the Navy Chief's comments is awaited.

The Reliance Group headed by Anil Ambani had faced a controversy with the Rafale Jet fighter deal. The Congress party alleged the government of favouring the company. The Indian and French government as well as Rafale and Reliance Groups have so far refuted allegations.