After a series of delays, Russia has been declared the lowest bidder in the Army’s multi-billion dollar deal for man portable air defence systems on Monday, official sources confirmed. However there are concerns over the selection as well as the threat of US sanctions for arms purchases from Russia.

“The Igla-S bid from Rosoboronexport of Russia has been declared the L1 in the Very Short Range Air Defence (VSHORAD) deal,” a defence official said.

The Request for Proposal (RFP) was first issued in October 2010 for over 5000 missiles, 258 single launchers and 258 multi-launchers estimated to cost ₹6,400 crore and trials began in 2012. Five contenders responded and eventually three made it to the trials - MBDA of France, Rosoboronexport of Russia and SAAB of Sweden.

Since then there have been trials and retrials as there were deviations in the products fielded and the Army tried to avoid a single vendor situation arising out of non-compliance of some vendors which would result in cancellation of the tender as procedure. Eventually all three companies were declared complaint after the re-trails last year, according another official.

Another official source said that of the three contenders, the MBDA bid was the most expensive at about $3.68 bn, SAAB at about $2.6 bn and Rosoboronexport at around $1.47 bn. The benchmark price decided by the Army was just over $2 bn. This led to a division within the ministry at such a low bid from the Russians compared to the benchmark price arrived at by the Army.

As the Cost Negotiation Committee (CNC) couldn’t arrive at a decision, the Defence Ministry had even formed an empowered committee to scrutinise all aspects of the offer before the L1 was decided.

The other concern is the US sanctions under the Countering America's Adversaries Through Sanctions Act (CAATSA) law that restricts defence purchases from Russia, Iran and North Korea. The US is yet to grant India a waiver for the $5.43 bn S-400 air defence deal with Russia signed in early October.

As per requirements, the system should have a maximum range of 6km, altitude of 3km along with all-weather capability and will replace the existing Igla in service which is in urgent need of replacement.