Defence Ministry Suspends Dealings With Sanjay Bhandari’s Firms

Meanwhile, the absence of a maintenance pact for the 2012 Pilatus deal is also costing the trainer aircraft fleet.

Pilatus PC-7 Mark II aircraft. 

(Photo Courtesy: Pilatus)

As the CBI continues its investigation into Swiss aircraft manufacturer Pilatus and arms dealer Sanjay Bhandari over a 2012 deal for 75 Pilatus PC-7 aircraft costing 2,896 crore, the Defence Ministry has ordered the suspension of all business dealings with Bhandari's firms.

The vigilance wing of the Defence Ministry intimated all its departments and wings, along with the Army, IAF and Navy, about its suspension order pertaining to Offset India Solutions (OIS) (Pvt) Ltd, which belongs to Bhandari, on 5 January, reported The Times of India.

Regarding the development, an official was quoted by TOI as saying:

The OIS Group’s response to a show-cause notice in June 2017 was not found satisfactory. So, business dealings with the OIS Group, its companies and functionaries will remain suspended for six months or until further order.

In the meantime, the absence of a maintenance pact for the 2012 deal is also costing the fleet of the trainer aircraft.

According to a September 2017 report by The Print, the maintenance pact pertains to the transfer of technology under which repair and support workshops would be set up to assist the aircraft. Instead of negotiating the "maintenance transfer of technology (MTOT)" in 2012, it still remains pending.

The Print report further pointed out to a fresh effort in this direction being negotiated via a Pilatus and Base Repair Depots deal.

Moreover, owing to corruption allegations in the 2012 deal, the acquisition of 38 more Pilatus PC-7 Mark II trainers for Rs 1,450 crore had also been stalled.

Ajai Shukla, an expert on strategic affairs, defence and diplomacy, says that the Indian Air Force (IAF) had a “motivated campaign” to buy the Swiss Pilatus aircraft.

This aircraft was preferred over "Hindustan Aeronautics Ltd's (HAL's) project to design and develop an indigenous basic trainer - the Hindustan Turbo Trainer - 40 (HTT-40), which is currently at an advanced stage of development", he wrote in a blog post on 7 January.