India Cancels $5.1B for 12 Minesweepers with South Korea, Fresh Tender to be Issued

The negotiations for Indian Navy’s 12 new Mine Counter-measure Vessels (MCMVs) from South Korean shipyard for an estimated $5.1 billion has collapsed at the final stage.

The MCMVs were to be built at Goa Shipyard (GSL) in collaboration with Busan-based Kangnam Shipyard. But the talks failed with the shipyard over pricing and left no choice to the government other than issuing a fresh tender.

“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) was quoted as saying by Hindustan Times Monday.

India is facing scarcity of minesweepers as the country is currently left with only four, following decommission of INS Karwar and INS Kakinada.

The ships were decommissioned at the Mumbai naval dockyard in May last year. The scarcity is so alarming that even if India had signed contract with South Korea, the first specialized warship would roll out only by 2021.

The Navy had begun the hunt for eight MCMVs in July 2005.

But the subsequent selection process, in which Kangnam was chosen over Italian Intermarine, got enmeshed in allegations of agents and other irregularities. The tender was finally scrapped in 2014.

Then, in February 2015, the defence acquisitions council, headed by then defence minister cleared the new Rs 32,000 crore ($4.9 billion) project for construction of 12 MCMVs at Goa Shipyard with foreign collaboration.

The 1,000-tonne MCMVs are used to detect marooned and drifting mines with their high-definition sonars, acoustic and magnetic sweeps. They then use remote-controlled systems like small underwater vehicles to detonate the mines at safe distances.

 “The decision to issue a fresh RFP by the defence minister is in line with numerous clearances accorded to pending acquisition cases,” Mital said.

Kangnam Corporation and Italian firm Intermarine could bid for India’s latest tender, experts said.