New Delhi: After reviewing Indo-Turkish relations in the wake of the recent sudden dip in diplomatic ties with the Recep Tayyip Erdogan government on its stand on Kashmir, India is going ahead with a US$2.3 billion (about Rs 15,000 crore) deal to manufacture Fleet Support Vessels (FSVs) in collaboration with a Turkish shipyard.

The formal contract was signed days after India issued a strong statement rejecting all references made to Jammu and Kashmir in a joint declaration by Turkey and Pakistan during President Erdogan’s visit to Islamabad last month.

Turkey’s TAIS had emerged as the lowest bidder for a contract to manufacture five of the 45,000-tonne FSVs at the Vizag-based Hindustan Shipyard Limited (HSL) last year, but the contract signing was put on hold in October following the repeated raising of Kashmir issue by Erdogan at international forums.

The contract was signed by HSL last month after clearances were given by the Ministry of Defence (MoD), according to sources, who said the Ministry of External Affairs was also consulted before the decision was taken.

HSL had been keen to resolve the matter at the earliest and had written several letters to the defence ministry over the past few months. “MoD has directed HSL to put the project on temporary hold in view of recent diplomatic developments with Turkey. HSL inputs regarding the legal and financial implications of cancelling the bid of M/s Anadolu shipyard have been submitted to the MoD,” the ministry told the parliamentary standing committee on defence.

The defence ministry’s vigilance department was asked to review the order and gave a go-ahead, said a source, who did not wish to be identified. Similarly, inputs were received from MEA on diplomatic implications, after which it was decided to proceed with the Turkish collaborator. The contract was signed last month after the defence ministry removed its temporary hold order.