Huge Indian market to become available to Denel as blacklisting resolves

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State-owned aerospace and defence giant Denel will soon be able to do business in the world’s largest arms market when its blacklisting in India is resolved in the coming months.

This is according to Denel Group CEO Riaz Saloojee, who made the comments during a presentation of the company’s annual results earlier this month.

India’s Business Standard last week reported that the blacklisting would soon end as the CBI (Central Bureau of Investigations) has not been able to prove any charges against the firm after eight years of investigation. Defense News reported a source in the Indian Ministry of Defence as saying a letter had been sent to Denel on August 12 lifting the ban, and that a Denel executive had confirmed the ban was lifted.
“The investigation found that there was in fact no illegal or untoward activities that had been conducted by Denel in India. We welcome the removal of the blacklisting because doing business with India again will further strengthen the relationship South Africa enjoys with the country within the context of the BRICS even more,” Vuyelwa Qinga, Denel Group Communications Manager told defenceWeb.
“In time, as Denel, we will present a more comprehensive view of the kind of capabilities and technology this opportunity opens up for Denel within the Indian market, which is one of the most critical markets for our company.”

Denel was blacklisted in India in 2005 after allegations that it paid kickbacks to Vara Associates, a company based in the Isle of Man, to help secure five deals between July 1999 and April 2005, to supply the Indian Army with 1 000 anti-material rifles and over 300 000 rounds of ammunition. No irregularities were found during investigations in South Africa, the Isle of Man, Switzerland and the UK.

The CBI probe started in June 2005, by which time 400 rifles had been delivered and two months after the Indian government stopped all dealings with Denel amid allegations that it paid ‘commission’ to the value of 12.75 per cent of the total worth of the arms deals secured with the Indian Army to Vara Associates.

The contracts involved the supply of 700 NTW-20 anti-material rifles, knock-down kits for another 300 rifles of the same make and 398 000 rounds of ammunition.

After the Denel deal fell through, India’s Ordnance Factory Tiruchirappalli began manufacturing the locally developed Vidhwansak multi-calibre anti-materiel rifle, which bears many similarities to the NTW-20. Available in 14.5 mm, 12.7 mm and 20 mm calibres, it has an effective range of approximately 2 000 metres.
“Denel will now emerge as a keen competitor in India’s $4-billion variety of 155 mm/52 calibre artillery gun projects,” Indian defence analyst Nitin Mehta told Defense News. The ban on Denel stopped the Indian Army’s acquisition of 155 mm artillery as well as a project to install Denel’s 155 mm gun on Indian tank chassis.



Saloojee said that Asia is an important environment for the company, which has seen a multi-billion rand order for turrets from Malaysia. India is the world’s biggest arms importer, as it replaces almost every category of equipment in its armed forces, but the Asia-Pacific region as a whole has a robust defence market which Denel is targeting.