In the wake of a series of scams in military purchase, the Defence Ministry has overhauled its procurement procedure to reduce dependence on foreign vendors and sought to create a level-playing field for Indian private companies, which are denied equal opportunity when compared with state-owned agencies.
Defence Minister A K Antony has given up his discretionary power for emergency purchase or last-minute changes in the tender. In future, all such decisions that require bypassing the standard procedure will have to be approved by the Defence Acquisition Council (DAC), the ministry’s apex decision-making body chaired by the Defence Minister. The three service chiefs, DRDO chief and other senior officials in the ministry are the members of the DAC.
The service chiefs and director-general of Indian Coast Guard were given authority to purchase anything they want up to Rs 150 crore without any approval from the minister. Previously, the sanction for them was only up to Rs 50 crore.
Stung by the Rs 3,600-crore VVIP copter scam, the Defence Ministry has decided that specifications for any tender (staff qualitative requirements) will have to be frozen at the “acceptance of necessity” (AoN) stage. The validity of AoN has been reduced from two years to one year for speedy acquisitions.
While buying the VVIP helicopters from AgustaWestland, four components, including a casualty evacuation system, were added to the specifications at the price negotiation stage, shooting up the contract value by Rs 100 crore.
The new defence procurement policy, approved by the DAC on Saturday, has made it clear that buying military wares from abroad should be the last option. The services should strive either to make the equipment and components in India or buy from an Indian firm.
For all defence purchase, there will now be an order of preference, in decreasing order: 1. Buy (Indian) 2. Buy and Make (Indian) 3. Make 4. Buy and Make with transfer of technology and 5. Buy (Global). Hence, import will be the last option.
The policy favours increasing participation of Indian industries in defence either directly or through a joint venture with a foreign partner.
In an encouraging step, the ministry opened up the maintenance, repair and overhaul of military equipment to private players ending the monopoly enjoyed by the defence public sector undertakings and ordnance factory boards for decades.
