Paris-based Armaris has agreed to waive a $1.6 billion penalty it demanded the Indian Defence Ministry pay for six Scorpene submarines, one of several obstacles to the long-delayed deal being worked out during talks here ahead of Prime Minister Manmohan Singh’s visit to France in mid-September.
A high-level team from Armaris arrived here last week to begin negotiations with Permanent Defence Secretary Subir Datta and other Indian defense officials.
A senior Defence Ministry official here said the French company has agreed to an earlier price tag of $2.75 billion for six submarines, which will be produced under license in India. Armaris waived the additional $1.6 billion it demanded earlier this year as a penalty for India’s failure to finalize a contract in a timely manner.
The company also agreed on the transfer of technology for production in India of submarine-launched Exocet missiles at no additional cost. Additional funds only will be needed for any direct sale of the missiles. A Long Time Coming
Scorpene negotiations began in 1999 with Thomson CSF, now Thales. Armaris is a joint venture of Thales and French shipbuilder DCN. The purchase was finalized in 2002 at the Ministry of Defence level but a contract was never signed.
With Armaris now willing to drop the price increase, the contract should be inked this year, the Defence Ministry official said.
An Armaris executive here acknowledged that executives from France were here to finalize the deal, but he would not go into detail.
The Indian Defence Ministry official said the Navy has paid $137 million to state-owned shipyard Mazagon Docks Ltd. (MDL), Mumbai, to initiate training and buy equipment for production of the Scorpene submarines there.
An MDL official confirmed the money has been received and some of its technical engineers have been sent to France for training. MDL also is opening an office in Cherbourg, France, to help facilitate the deal.
India is negotiating production of the six Scorpenes as part of a long-term submarine program dubbed Project 75, under which India will build 24 additional submarines in India by 2030.
The Navy’s current fleet includes 12 Russian Kilo-class and four German HDW subs. Two of the four HDWs were built at MDL. Four vintage Foxtrot-class submarines are being decommissioned.