MoD clears blacklisting policy, says no blanket ban on armament firms suspected of graft

New Delhi: The Defence Acquisition Council (DAC), chaired by Defence Minister Manohar Parrikar, on Monday cleared the blacklisting policy for banning or suspension of firms for wrongdoings in defence deals, and also cleared procurement proposals worth Rs 82,117 crore.

"The DAC considered and approved guidelines for suspension or banning of entities or blacklisting," sources said.

The issue of US-2 amphibious planes came up for discussion, but no decision was taken, sources said.

The DAC for the first time cleared two proposals under the Indigenous Design Development and Manufacturing (IDDM) category for Light Combat Aircraft (LCA) Tejas and Light Combat Helicopters (LCH).

For Tejas, an Acceptance of Necessity (AON) for 83 LCAs at a cost of Rs 50,025 crore was cleared for the Indian Air Force (IAF). This will include simulators and ancillary equipment, and is in addition to the 40 Tejas fighters that the IAF is getting.

The second proposal cleared in the IDDM category was for 15 LCHs -- 10 for the IAF and five for the Indian Army -- at a cost of Rs 2,911 crore.

The blacklisting policy was earlier supposed to come with the Defence Procurement Procedure (DPP), which was released in March this year, and came in effect from April.

Parrikar said last month that while "criminal activities" like receiving kickbacks should "normally" be punished with a ban, the decisions will be based on requirement of "national security".

In December 2014, a few months after taking over as the defence minister, Parrikar had said that the government is contemplating legalising "representatives" from defence firms, to remove middlemen who work for kickbacks.

He had also said that the government is thinking of reviewing all cases of blacklisted defence firms and may give conditional and limited approval to dealing with some based on merit.

The other proposals cleared by the DAC on Monday included an AON for buying 598 UAVs (Unmanned Aerial Vehicles) under Buy Indian category at a cost of Rs 1,100 crore, and procurement of 464 T-90 tanks from Ordnance Factory Board at Rs 13,448 crore.

It also cleared the way for issuance of an RFP (Request for Proposal) for six additional regiments of Pinaka rocket launchers at a cost of Rs 14,633 crore.