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NEW DELHI: Modi government Defence Minister Manohar Parrikar is set to axe UPA defence minister AK Antony's most important rule — and as a result, India's defence purchase programme may at last get speeded up.
Antony had decreed that any defence purchase must be put on hold in the event of a complaint or allegation against the deal.
ET has learnt that the Modi government has decided to nix this rule. A procurement process will now continue regardless of any complaint, which will be simultaneously examined. This has huge implications for India's defence programme since many major acquisitions get severely delayed as the ministry of defence (MoD) examines complaints.
Senior officials familiar with the matter, who spoke to ET on the condition that they not be identified, said the new rule will be enshrined in the new Defence Procurement Policy that's expected to be in place by May.
Officials said revoking the Antony era rule was crucial because in the fiercely competitive and high-stakes defence manufacturing industry, players and other interested parties would often ensure a complaint was filed against a rival.
"This would always send a high-value defence deal into a tailspin because the then minister Antony would insist on first investigating a complaint," an official said. MoD officials said the earlier rule was aimed at steering clear of any plausible corruption charge.
Several deals worth thousands of crores were cancelled or retendered repeatedly by the UPA government on corruption allegations, including deals for purchase of VVIP helicopters, light choppers for the army and missiles. Officials said this procurement paralysis had severely affected modernisation of armed forces.
The army needs light choppers to operate in Siachen and other high-altitude regions.
But the deal was put on hold in 2013 due to allegations against AgustaWestland. The process stopped even though AgustaWestland's chopper has ceased to be a viable option after it was disqualified on technical grounds. Similarly, the procurement of Israeli Barak missiles for warship defence systems was kept on hold for almost five years before being cleared in December 2013.
BLACKLISTING OPTION TO STAY
The biggest hit was in March 2014, when the ministry put all dealings with engine manufacturer Rolls-Royce on hold pending an inquiry into allegations of corruption. Following sharp protests from the defence services, this ban was lifted after a few months.
Officials also said MoD will retain the option of blacklisting any company found indulging in corrupt practices. But even here, there's a new rule — the government can still place orders with a blacklisted firm in the interest of national security, officials said.
This means if there is an equipment or spare part that can only be supplied by a particular company, transactions can continue even if the firm has been blacklisted.
Officials said there was considerable thought given on whether blacklisting should be replaced by a system of heavy penalties, as is the practice in many countries. However, the Indian Penal Code provisions — which treat bribery as a serious criminal offence — were seen as a legal hurdle that could not be crossed.
MoD will also put in place a system of registering agents, who may be given some identification documents that would allow them to hold meetings with government officers. Officials, however, noted that a previous effort to register arms agents did not work because defence companies had not come forward with names.
Antony had decreed that any defence purchase must be put on hold in the event of a complaint or allegation against the deal.
ET has learnt that the Modi government has decided to nix this rule. A procurement process will now continue regardless of any complaint, which will be simultaneously examined. This has huge implications for India's defence programme since many major acquisitions get severely delayed as the ministry of defence (MoD) examines complaints.
Senior officials familiar with the matter, who spoke to ET on the condition that they not be identified, said the new rule will be enshrined in the new Defence Procurement Policy that's expected to be in place by May.
Officials said revoking the Antony era rule was crucial because in the fiercely competitive and high-stakes defence manufacturing industry, players and other interested parties would often ensure a complaint was filed against a rival.
"This would always send a high-value defence deal into a tailspin because the then minister Antony would insist on first investigating a complaint," an official said. MoD officials said the earlier rule was aimed at steering clear of any plausible corruption charge.
Several deals worth thousands of crores were cancelled or retendered repeatedly by the UPA government on corruption allegations, including deals for purchase of VVIP helicopters, light choppers for the army and missiles. Officials said this procurement paralysis had severely affected modernisation of armed forces.
The army needs light choppers to operate in Siachen and other high-altitude regions.
But the deal was put on hold in 2013 due to allegations against AgustaWestland. The process stopped even though AgustaWestland's chopper has ceased to be a viable option after it was disqualified on technical grounds. Similarly, the procurement of Israeli Barak missiles for warship defence systems was kept on hold for almost five years before being cleared in December 2013.
BLACKLISTING OPTION TO STAY
The biggest hit was in March 2014, when the ministry put all dealings with engine manufacturer Rolls-Royce on hold pending an inquiry into allegations of corruption. Following sharp protests from the defence services, this ban was lifted after a few months.
Officials also said MoD will retain the option of blacklisting any company found indulging in corrupt practices. But even here, there's a new rule — the government can still place orders with a blacklisted firm in the interest of national security, officials said.
This means if there is an equipment or spare part that can only be supplied by a particular company, transactions can continue even if the firm has been blacklisted.
Officials said there was considerable thought given on whether blacklisting should be replaced by a system of heavy penalties, as is the practice in many countries. However, the Indian Penal Code provisions — which treat bribery as a serious criminal offence — were seen as a legal hurdle that could not be crossed.
MoD will also put in place a system of registering agents, who may be given some identification documents that would allow them to hold meetings with government officers. Officials, however, noted that a previous effort to register arms agents did not work because defence companies had not come forward with names.
