Media reports since Saturday claim India has lifted the ban on Italian defence company Leonardo (previously known as Finmeccanica). The ban was imposed in 2014 following allegations of corruption in the Rs 3,600 crore contract to supply helicopters to carry the prime minister, vice president and president.
Finmeccanica rebranded itself as Leonardo in 2016.
The Times of India reported on Sunday the ministry of defence has decided to resume business dealings with Leonardo "subject to certain conditions imposed on the company".
The Times of India reported that "Under the conditions, Leonardo SpA cannot make any commercial claims or file any civil suit against the Indian government for any previous deal." Moreover, investigations into the VVIP helicopter deal by the CBI and Enforcement Directorate will continue.
The allegations of corruption in the purchase of 12 AW-101 helicopters surfaced in 2012 with claims that Rs 360 crore were paid to politicians, bureaucrats and Indian Air Force officials to influence the decision to purchase the helicopter. The allegations were levelled against AgustaWestland, a subsidiary of Leonardo, that manufactured the helicopters.
Times Now had reported in late October that India and Italy were in negotiations to resume Leonardo's activities in India.
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"One argument for lifting the ban is that Leonardo, partially owned by the Italian government, has been restructured and is very different from AgustaWestland, 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," Times Now had reported.
The Times of India reported the ban had "limited India’s options" in arms purchases as Leonardo is involved in building a range of weapon systems such as naval guns, missiles, torpedoes, electronics and radars.
A major after-effect of the ban on Leonardo was the Indian Navy's decision to cancel the purchase of torpedoes for its new class of Scorpene submarines. The Indian Navy had intended to purchase 98 Black Shark torpedoes, built by a Leonardo subsidiary, as the primary armament of the six Scorpene submarines. The Indian Navy cancelled the Black Shark torpedo contract in 2016 and has yet to select a new class of torpedo for the Scorpene submarines. This has meant the submarines rely on old SUT torpedoes supplied by Germany.
Reports also said lifting the ban would give India leverage to prevent the company from supplying equipment to Pakistan.
