India has postponed a howitzer buy decision because of a dispute over the timing of offset obligations. (BAE Systems)
NEW DELHI — India’s Ministry of Defense has deferred a decision on the purchase of 145 ultra light howitzers from the US subsidiary of BAE Systems because of issues relating to offset obligations, said an MoD source, although the program has not been canceled.
The Defense Acquisition Council, the MoD’s top decision-making body, at a Feb. 24 meeting deferred a decision on the howitzer buy because BAE systems wanted six years, instead of four, to meet its offset obligations. According to Indian law, overseas defense companies have to discharge offsets up to 30 percent of the value of the contract.
The program had been approved in 2010 but formal agreement is still awaited.
Meanwhile, the estimated cost of the 145 guns has risen from about $493 million in 2010 to $885 million because of inflation.
MoD originally selected Singapore Technologies, but that deal was canceled after charges of alleged corruption. ■