In a major shift from the UPA regime's blacklisting policy, the Narendra Modi government has decided against barring Finmeccanica and AgustaWestland from doing business with India. However, it has placed conditions, which will disallow the company from getting any new order where there is another vendor option.

As of now, all deals with the Finmeccanica group, its affiliates and subsidiaries are on hold. The Defence Ministry decision, for which orders have been issued, will allow the group to continue with ongoing business and compete in other deals.

Finmeccanica, it may be noted, came under investigation in the VVIP chopper deal in which its subsidiary AgustaWestland has been accused of corrupt practices.

This, sources said, may well be the template for all the firms blacklisted by the UPA government. The principle at play is to ensure that there is no impact on the country's defence requirements while still imposing some penalty on the firm under scanner.



The terms, which has been cleared by the Attorney General, state:

* All ongoing contracts will continue unhindered.

* All contracts related to spares will continue

* Contracts with Russian manufacturers, where Finmeccanica group is involved in the back-end, will continue

* Finmeccanica will be allowed to participate in all tenders but if there are multiple options, the group will not be considered regardless of the competitiveness of the offer.

* However, where the group is the single vendor with no other firm providing options, the government is empowered to go ahead with the deal.

While giving these allowances, sources said, criminal investigations will continue and remain delinked from the procurement processes.

The decision is a significant departure from the previous government which chose to bar every firm that came under investigations. As a result, some of the top suppliers to the Indian Armed Forces, were affected, crippling many ongoing programmes.

It may be recalled that the new government had given indications in its first days of power that the blacklisting procedure would be reviewed, given its implications on the modernisation process of the armed forces.