NEW DELHI - Indian Navy's $5 billion program to build 12 high-tech new generation mine counter-measure vessels (MCMVs) has run into rough weather, as Kangnam Corporation of South Korea virtually refuses to provide a performance guarantee for supervision of construction of the vessels by state-owned Goa Shipyard Ltd.
The design and technology transfer agreement worth over $ 1 billion with Kangnam Corporation for 12 MCMVs in India is "not in sight as of now" an MoD official added. "There are several parameters of the technology transfer which need to be finalized before the agreement with Kangnam is signed."
"The real bone of contention is we want full intellectual property rights of the MCMVs which is not acceptable to the selected design and technology partner," the MoD official disclosed.
No executive of Kangnam Corporation was available for comment.
MoD official noted that since an additional order of 12 MCMVs is likely to top the existing order of 12 to Goa shipyard the negotiations with the South Korean company will cover large parameters of technology transfer.
Goa Shipyard was nominated by MoD to build 12 MCMVs in 2015, which in turn shortlisted Kangnam Corporation to transfer technology to build the vessels. India does not have the technology to build these specialized vessels.
Equipped with specialized composite material, the MCMVs are expected to be deployed by the Indian Navy to detect variety of underwater mines. Currently the Indian Navy operates outdated Russian made MCMVs.
"It is very important to build an indigenous capability to build these specialized vessels even if it means paying steep price to acquire technology from Kangnam Corporation," a senior Indian Navy official said, adding that the acquisition of MCMV is already delayed with 24 vessels needed.
Earlier an attempt was made through a 2008 global tender to acquire these vessels. In response, South Korea's Kangnam Corporation emerged as the lowest bidder against Intermarine of Italy.
However, the deal could not be signed with the South Korean company because of charges of alleged use of defense agents in the 2008 tender, a violation of Indian law. The tender was cancelled in early 2014. The Indian government then put the tender in the Buy & Make (India) category, which restricted it only to domestic shipyards.
In 2015, GSL floated a global tender to Kangnam Corporation of South Korea, Intermarine of Italy, Navantia of Spain, Lockheed Martin of USA, Thyssenkrupp of Germany and two Russian shipyards seeking design and technology transfer for the MCMVs. Only Kangnam Corporation responded to the tender as a single bidder, which was eventually approved by MoD defense in January 2016.
"The acquisition of much needed MCMV has suffered in the MoD where the procurement process is very arduous and cumbersome," defense analyst Nitin Mehta said.
Vivek Raghuvanshi is the India correspondent for Defense News.