New defence procurement policy under consideration

Aiming for transparent but faster military procurements, the Narendra Modi government is considering rolling out by January a new defence procurement policy that will have fresh norms for blacklisting firms and engagement of 'agents' besides attracting investments.

PTI| Last Updated: Nov 27, 2014, 19:33 PM IST

New Delhi: Aiming for transparent but faster military procurements, the Narendra Modi government is considering rolling out by January a new defence procurement policy that will have fresh norms for blacklisting firms and engagement of 'agents' besides attracting investments.

The proposed guidelines are undergoing intense brain storming in the Defence Ministry with sources indicating that it may be a part of the defence procurement policy a manual that is revised every year or could also be stand alone.

"The main focus is to make sure that the much needed procurements for the armed forces happens in a transparent but faster process. The new policy could come out by either this year-end or early January," official sources said.

They said the new policy will address the issue of blacklisting of defence firms as blanket ban has proved to be detrimental to the interests of the armed forces as it cripples the procurement process.

"The thinking is that there cannot be a blanket ban on defence firms. Measured steps can be taken and the policy will outline what steps would be taken for various offences, if committed," the sources said.

Under UPA Defence Minister A K Antony, a number of companies were blacklisted due to alleged cases of corruption.

The last major one was that of Italian defence giant Finmeccanica in a Rs 3,600 crore deal on VVIP helicopters.

However, the Modi government had in August this year allowed Finmeccanica and its subsidiary Agusta Westland to do business with India but in a limited capacity.

It has been banned from participating in future tenders but allowed to carry out ongoing contracts with the group.

Asked about the issue of 'agents', the sources said that one cannot expect a foreign company to work in India without having local representatives or office.

"Defence procurement processes are tedious, long and complicated. One cannot expect a firm, headquarted thousands of miles away, not to have a local office or people as representatives here," they said.

They also said that "Make in India" policy of Modi will get a major push under the new guidelines.

"It will also look into measures that could boost Make in India policy and also attract more foreign investments in the defence sector," the sources said.

These issues were also discussed in Defence Minister Manohar Parrikar's first meeting of the Defence Acquisition Council (DAC) last week.

Interestingly, while the DAC has decided to buy mounted gun systems worth Rs 15,750 crore, first since the Bofors scandal, more than half the foreign original equipment manufacturers (OEMs) that are capable of making the gun are barred from doing defence business in India.