India’s Ministry of Defense has postponed the planned purchase of 145 ultra light howitzers from BAE Systems stating offset obligation issues, according to Defense News.
The reason for further delay in formalizing an agreement is that BAE systems has asked for six years, instead of four, to meet its offset obligations, an MoD official was quoted as saying. 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 has not yet received a formal go-ahead. Meanwhile, the estimated cost of the 145 guns has risen from about $493 million in 2010 to $885 million because of inflation.
The MoD had originally selected Singapore Technologies, but that deal was canceled after charges of alleged corruption.
According to various reports, the deal may not be signed until the next government takes charge later this year. Adding, India’s defence expenditure for the current fiscal year is also believed to be minimal.