Plug Loopholes in defence deals

Stung by the recent VVIP chopper scam, the Defence Ministry will unveil a new procurement policy to plug loopholes that allow bribery and encourage indigenous acquisitions.

As part of its efforts, the Ministry is planning to enforce strict provisions to discourage Indian private firms from offering imported products to the armed forces with a 'Made in India' tag and ask them to produce the equipment indigenously.

The new Defence Procurement Procedure (DPP) will be unveiled very soon and the amendments to be made in the policy would be finalised by the Defence Acquisition Council (DAC) meeting to be held on Saturday, Ministry officials said in New Delhi.

The policy changes would be such that it will plug all the loopholes in the present processes to avoid any scope of bribes to be paid by the vendors, they said.

Under the proposed rules for procurement under the 'Buy and Make India' provisions, the Defence Ministry is relaxing the norms for Indian players for production in joint ventures with foreign players.

However, the provisions for indigenous content in these products are getting tougher as the government will not allow the vendors to import equipment from abroad and offer it to the armed forces with a 'Made in India' tag, sources said.

Under the new plans, the Indian vendors would be allowed to form JVs with foreign companies under which they will have to have 50 percent indigenous component in overall equipment inventory whereas earlier this percentage was to be maintained throughout the tender completion process.

In its last meeting on 2^nd April, DAC had decided on several issues including ending the Raksha Udyog Ratna (RUR) status for the indigenous private sector players giving a level-playing field to all the players involved in defence production.

DAC is also going to take a final call on the proposal to finalise all the specifications in the tenders for procuring military equipment before it is approved by DAC, the sources said.

The amendments in DPP are based on the Ravinder Gupta Committee report on boosting indigenisation which has given suggestions to give the first right of refusal to the indigenous industry for the weapon system requirement of the armed forces.

DPP will also focus on bringing more changes in the ship- building sector in the country to increase the production capabilities of the Indian shipyards to construct ships at a faster rate.