New Delhi, Nov 19: The Narendra Modi government has decided to cancel purchase the of eight mine counter-measure warships (mine-sweepers) from South Korea due to alleged involvement of a middle men in the deal.
Keeping Prime Minister Narendra Modi's "Make In India" pitch in mind, the small warships will now be constructed by a state-run Goa Shipyards over the period of next seven years, using the technology acquired by the foreign manufacturer.
The ministry of the defence had found irregularities in the `6,000 crore deal from Kangnam Corporation based in South Korea to buy eight mine counter-measure vessels for Indian Navy.
Officials claimed that the company had hired middlemen to clinch the deal in favour of the company. Hiring of middlemen is a crime in India.
Earlier, on May 29, this year, the Defence Ministry had encashed a Rs 3 crore bank guarantee furnished by Kangnam Corporation, shortlisted to supply the mine-sweepers.
Earlier this year, the Attorney General had suggested the defence ministry to go ahead and scrap Rs 6,000 crore deal.
The MoD had reportedly sought AG Mukul Rohtagi's opinion over cancellation of the deal on charges of irregularities and hiring of middlemen, officials said.
However, the Navy was strongly opposed to the move to "close the case and start afresh" for what it considers to be "a critical operational requirement".
India at present has seven old mine-sweepers to guard its east and west coasts when it needs at least 24 of these. Need for these mine-sweepers is increasing with every passing day as the activity of Chinese submarines has greatly increased.