India Cancels Minesweeper Deal Worth Rs 32,000 Crore with South Korean Firm

Talks between Goa Shipyard Limited and South Korea's Kangnam Corporation for project to build 12 minesweeper vessels fall through.


The negotiations between the state-owned Goa Shipyard Limited (GSL) and South Korean shipyard Kangnam Corporation for a program to build 12 new minesweeper vessels fell through at the final stages. The Rs 32,640 crore project, a part of the efforts to build the Navy’s mine-warfare capability, was seen as one of the costliest ‘Make in India’ initiatives.

The failure of the talks would now force the Indian government to begin a fresh tendering process for minesweepers. “We were unable to resolve commercial complications despite our best efforts. This particular deal with the Koreans is off,” GSL chairman Rear Admiral Shekhar Mital (retd) told the Hindustan Times.

The matter gains significance as the Indian Navy has only six vessels that were bought from Soviet Union in 1970s in its minesweeper force. Two of them were decommissioned in May and the current fleet is scheduled to be decommissioned between 2018 and 2020. The Navy is said to require at least 24 minesweepers to secure major harbors. This was GSL’s third attempt in the last 10 years to build these vessels.

A fresh request for proposal (RFP) will be issued to foreign military contractors for the technology transfer for the Mine Counter Measure Vehicle (MCMV) project, Mital told the publication.

The government’s deal with Kangnam Corporation was in trouble in 2014 when allegations were made that the firm hired middlemen to pull the contract in their favor. A parliamentary report in March last year stated that India could be without a minesweeper even if the deal went through. The latest setback has complicated matters for the fifth largest navy in the world. The construction was to begin in April 2018, and all 12 deliveries were to be finished between 2021 and 2026.

Mital said that while the project is delayed, the GSL finalized all intricate details and specifications for the vessels in the last two years. “The decision to issue a fresh RFP by the defence minister is in line with numerous clearances accorded to pending acquisition cases,” he said.

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