India in Mission Mode to Save Philippines Navy Deal

5:49:00 PM
NEW DELHI, -- India is exploring direct diplomatic intervention and government guarantees to rescue a deal for an urgent warship requirement by the Philippines to patrol the South China Sea after a Kolkata-based shipyard that emerged the lowest bidder failed in financial assessment tests by the buyer.

The defence ministry has requested Indian mission in Manila to help resolve the matter, which has gained more urgency after the Philippines won a Hague ruling against China over the South China Sea dispute, officials told ET.

They said the Indian diplomatic mission in Manila has been made aware of the problem being faced by state-owned Garden Reach Shipbuilders and Engineers (GRSE) that had made a Rs 2,150-crore bid to supply two light frigates to the Philippines, with a request for intervention. Earlier this month, GRSE bid suffered a setback after it failed to meet financial requirements in post-qualification assessment by the Philippine navy, as reported by ET.

Unlike the Indian system of procurement, where the navy or coast guard make trance payments as the construction progresses at the yard, the Philippines order was structured around a single payment only when the frigates were delivered.

The Philippine navy found that while GRSE had physical infrastructure and capability, it did not have adequate funds available to carry out the construction of the vessels over the next few years without any supporting payments.

The GRSE bid for the light frigates had earlier beat proposals from Korean shipbuilding giants Daewoo and Hyundai and Spanish firm Navantia to emerge as the winner on both technical and commercial grounds.

India has been pursuing military supply contracts, particularly in the naval domain, in several nations in the South China Sea region. As reported earlier, the country is also firming up several military contracts with Vietnam — Brahmos missile system, weaponising two of its Petya class frigates for an antisubmarine role and supply of at least ten patrol boats.

Indian Navy Kamorta (P-28) class ASW corvette.

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