Defence Ministry Likely to Suspend SMPP Ltd After CBI Arrest of CEO Ashish Kansal in ₹500-Crore Bribery Probe

New Delhi, October 16, 2026: The Ministry of Defence is expected to consider suspending business dealings with private ammunition maker SMPP Limited after the Central Bureau of Investigation arrested the company’s CEO and promoter-director, Ashish Kansal, in an alleged bribery case linked to a ₹500-crore supply contract with state-owned Munitions India Limited (MIL).

Officials familiar with the matter said the Department of Defence Production is likely to take a decision under existing procurement rules and guidelines. The move would come in the wake of a CBI case that also led to the arrest of Anil Kumar, Executive Director (Operations) at MIL, and Kumar’s brother B Harshavardhan.

The CBI registered the case on October 12, 2026, and made the arrests on October 13. According to the agency, Kumar, acting in collusion with private contractors and vendors, allegedly demanded and accepted illegal gratification in return for official favours and for sharing sensitive information related to defence production, procurement and other strategically important activities of MIL. The FIR said such unauthorised disclosure could jeopardise national strategic and security interests and compromise the integrity of defence procurement.

SMPP had been awarded a ₹500-crore ammunition supply contract by MIL for a one-year period. The FIR said Kansal remained in regular contact with Kumar in connection with the deal. An SMPP employee, Ravit Kumar Tewatia, was also named in the case. Investigators have also alleged that Kumar routed and parked a substantial part of the illegal proceeds through his wife Chetnashri, his brother Harshavardhan and other relatives.

One report cited in the source said a tip-off about a large hawala delivery late at night to Kumar’s Pune residence led investigators to intercept about ₹1.7 crore and trace the flow of money back to Kansal through a chain of intermediaries.

Searches conducted by the CBI yielded ₹1.73 crore in cash from Kumar’s premises in Pune. Further searches at locations linked to the accused in Mysuru, Bengaluru and Delhi reportedly led to the recovery of around ₹50 lakh in cash and incriminating documents, taking the total cash seizure to roughly ₹2.23 crore. A special court in Pune remanded the three accused in CBI custody till October 19. The Defence Ministry has already suspended Anil Kumar with effect from October 13.

Possible action under procurement rules

Under the Defence Procurement Manual 2025 and the Ministry of Defence Guidelines for Penalties in Business Dealings with Entities, the competent authority can impose financial penalties and/or suspend or ban business dealings with an entity that uses corrupt practices, unfair means or illegal activities at any stage to secure a contract, even where a Pre-Contract Integrity Pact is not required.

A suspension can be ordered while a full inquiry is pending, when a complaint has been referred to the CBI or another investigating agency, or when the initiation of a criminal investigation or inquiry is intimated to the ministry. Once an entity is suspended, it becomes immediately ineligible to participate in future bids, and no Request for Proposal is issued to it.

The suspension can also extend to allied firms. In the case of joint ventures or consortiums, partners may be treated as suspended as well. The period of suspension normally does not exceed one year, although some reports have indicated an initial six-month period under newer guidelines that can be extended by the concerned secretary. In exceptional cases involving national security, longer action is possible. Even so, suspended entities may still be allowed to participate in future RFPs for spares, upgrades and maintenance of proprietary equipment they had earlier supplied, if no alternative source is available.

SMPP Limited, part of the SM Group, was founded in 1985 by Dr. S.C. Kansal, an IIT Bombay PhD in Chemical Engineering, as S.M. Pulp Packaging Private Limited, originally to manufacture pulp packaging materials. The company later diversified into defence production and now manufactures combustible cartridge cases, bulletproof jackets, ballistic helmets, armour solutions including boron carbide ceramics, ammunition components, and, more recently, loitering munitions and drone-related systems.

The company operates a manufacturing facility at Palwal in Haryana and has won significant orders from the Indian Army, including a large contract for more than 1.86 lakh bullet-resistant jackets, along with recent emergency procurement orders for jackets and helmets. It has also executed export orders.

Ashish Kansal has been associated with the company since 2003 and was appointed Whole-time Director and CEO with effect from August 17, 2024. He holds a bachelor’s degree in textile technology from IIT Delhi and a master’s degree from the Georgia Institute of Technology.

Neither SMPP nor the Ministry of Defence had issued an official response at the time of the latest reports. The CBI’s investigation is continuing, and the agency is also examining other contracts handled by Anil Kumar, along with the roles of additional individuals named in the FIR.

The case comes amid continuing efforts to tighten accountability and curb corruption in defence procurement after the corporatisation of the erstwhile Ordnance Factory Board, from which MIL is one of the seven entities created.