Defence sources said the proposal to acquire 98 Black Shark torpedoes for the six under construction French Scorpene submarines for a price of Rs 1,200 crore has been nixed.
"There is an alternate that is being worked on," the sources said adding that the SeaHake torpedos from Germany's Atlas Elektronik could be an option.
Black Shark torpedoes, made by Whitehead Alenia Sistemi Subacquei (WASS), a subsidiary of Finmeccanica, had emerged the lowest bidder to arm the Scorpene submarines, the first of which will be handed over to the Navy by September this year.
The Navy had been pushing for it citing "operational necessity". However, sources said Defence Minister Manohar Parrikar has now decided to go for an alternative.
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Atlas Elektronik had come second during the bidding and sources said the reason for it to lose was due to certain differences between the Germany company and the French firm which is making the submarine in collaboration with MDL in Mumbai.
"However, it seems that the differences have been resolved now," sources said adding that either a fresh tender could be placed or the government may go in for direct purchase.
Sources said the Scorpene class submarines' have already been customised to integrate its fire control system with the Black Sharks.
Integrating another type of torpedo, will not only cost extra but also more time, the sources said.
Six submarines are being built at the Mazagon Dock Ltd with technology from French firm DCNS under an over Rs 25,000 crore project called P-75.