Centre ready to allow agents in defence deals

Move to speed up arms acquisition

India is set to allow involvement of agents of arms companies in the defence deals with certain conditions, breaking away from the “no-agent-in-military-contract” regime followed by the UPA regime under A K Antony.

“We will permit agents with debarment of payments. They will not receive any bonus, service fee or consultancy out of the order. The companies will have to hire them on regular payments and declare them to the department in advance,” Defence Minister Manohar Parrikar said Tuesday at an interaction with journalists.

Arms companies can recruit technical advisers or consultants, who can represent the companies in the meetings with defence ministry officials.

As defence ministry officials held a number of consultations with vendor companies before commercial contracts are inked, many a time, the firms found it expensive to fly down its executives to India every time for those meetings on short notice, Parrikar said.

South Korean company Kanganam was not penalised for hiring an agent to overcome the language barrier, though a deal to buy 8 mines counter measure vessels for the Navy from that firm was cancelled.

The defence ministry decided these vessels would be built at Goa Shipyard, which is free to buy the technology from any company, including the Korean firm that was not blacklisted.

Since the days of the first NDA government, there is a system of appointing agents in the defence deals. But the response from the industry so far was poor.

The defence ministry’s new position on the agents will be one of the components of the revised defence procurement rules, which would be out in the next one and half months. In addition, blanket blacklisting of military firms is also likely to go away, as reported by Deccan Herald in November.

“The principle of blacklisting is being reviewed keeping the interest of the forces in mind. The blacklisting cases will be examined on merit and the government can consider lifting of the ban or restriction to a reasonable level,” Parrikar said.

Bengaluru-based scam-tainted defence public sector undertaking Bharat Earth Movers Limited has been given a no objection certificate to procure spares from one of the original equipment manufacturers of the Tatra vehicles, which are critically required in the armed forces.