NEW DELHI, May 3:
The Government is contemplating four major changes in the defence procurement policy that will drastically alter India’s defence dealings with foreign vendors, a top official in the Defence Ministry has said.
The policy was under intense review for quite some time and the new procedure is likely to be unveiled by the end of this month or in the first week of June, the official said. “We are trying to make three-four broad changes and one of the focus area would be the procedure on handling complaints, as the present mechanism is proving to be blanket in nature,” he said, requesting anonymity. The Defence Procurement Procedure is reviewed after every 2 years. Last change was made at the end of May, 2013.
Explaining complaint’s handling procedure, the officer said, “We keep on getting a large number of complaints signed, unsigned, pseudonymous, anonymous and so on. Frequently, the practice has been that the minute you get a complaint, you freeze and stop \moving on that procurement.”
Blacklisting of a company, which indulges in wrong practices, would be the second focus area, as till date about 12-13 companies have been blacklisted, hampering many critical and strategically important defence purchases.
“If a company commits a criminal offence as per the procedures of the country, it must be punished, and we are working out that approach as to how to do blacklisting, whether there can be some intermediate stages and so on because that has the potential of making my procurement procedures move faster,” the officer said.
The third broad area is the offset policy which is not proving to be effective so far. The present offset policy mandates foreign OEM’s to discharge offset obligations through combination of permissible avenues including eligible product and services in all procurements cases where cost of the capital acquisition is Rs, 300 crores or more.
As on date, a total of 25 Defence offset contracts have been signed in the Defence Ministry out of which 16 cases pertain to Indian Air Force and 06 cases of Indian Navy and 03 of Indian Army. The total offset obligations are estimated at appox Rs. 29,274 crores over a period from 2008-2022.
“In most cases we are being forced to make dispensation or give concessions to the foreign companies because the policy is not right. The vendor is,perhaps, right but we are not right in the way the policy is framed at the moment. How do I change my offsets? The thinking there is that I must have what we call the directed offsets,” the officer said.
“For example, if I am buying Sukhoi, I would link it up with Make in India procedure and say that the Sukhoi manufacturing company must invest in India, with Indian companies, to manufacture the spare parts or components of Sukhoi itself. We have had discussions with the Russians, Americans, Britishers and French on this as a subject and we have interestingly found a positive response that for major platforms we would simultaneously target as part of directed offsets on this.
The fourth major change that the Ministry was contemplating is on the Make Procedure which already exists in the DPP but was not yielding the expected results.
According to the proposed broad framework 80 per cent of the research funding for Make Project would be provided by the Government to a Government or to a private company to develop that product in return for an assured order for a certain period so that it becomes commercially viable. (UNI)
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