Indian Cabinet Cancels Controversial Contract

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The Indian government on Feb. 17 terminated a controversial satellite lease agreement between Antrix Corp. — the commercial arm of the Indian Space Research Organisation (ISRO) — and Bangalore-based Devas Multimedia, a company owned by former ISRO officials.

Under the 2005 agreement, Devas would pay $300 million over 12 years to lease 90 percent of the transponder capacity on two S-band satellites ISRO plans to build.

Government auditors say Antrix gave Devas a sweetheart deal by leasing the S-band capacity at below-market rates and without seeking competing bids.

The decision to scrap the deal was made during a Feb. 17 Cabinet Committee on Security meeting presided over by Prime Minister Manmohan Singh.

An official announcement after the meeting said the Antrix-Devas deal “shall be annulled forthwith” as the government will not be able to allocate S-band capacity for commercial activities  due to “increased demand for allocation of spectrum for national needs,” including for defense, railways and other public utility services and societal needs.

Devas issued a statement calling the government’s decision “disturbing and inappropriate” and said it planned to take legal action.

ISRO spokesman S. Satish told Space News that the two S-band satellites are still being built and will not be ready for launch till 2013.