1. Centre set to announce new defence supplier blacklisting policy on February 22

Centre set to announce new defence supplier blacklisting policy on February 22

The defence ministry is likely to announce its new blacklisting policy for defence suppliers after the draft policy is approved by the defence acquisition council (DAC) on February 22.

By: | New Delhi | Updated: February 18, 2016 6:41 AM
FDI cap

Once the charges of wrongdoing have been proved, there will be graded fiscal penalties applied against the erring firm. Only in extreme cases will the defence ministry resort to blacklisting of a company.

The defence ministry is likely to announce its new blacklisting policy for defence suppliers after the draft policy is approved by the defence acquisition council (DAC) on February 22. The policy has been finalised by the defence ministry after inter-ministerial consultations with the law ministry, home ministry, finance ministry and commerce ministry.

Fifteen defence suppliers, including six foreign firms, are currently blacklisted by the defence ministry while 23 other companies are under scrutiny for allegations of corruption.

Sources said that the new blacklisting policy is likely to be on the agenda of this month’s DAC meeting chaired by defence minister Manohar Parrikar. While announcing the new Defence Procurement Procedure (DPP) last month, Parrikar had said that the blacklisting policy is not a part of the DPP and will be issued separately.

The new policy will be a clear departure from the policy pursued by the ministry under UPA’s defence minister AK Antony who insisted that a defence deal must be put on hold if there was an allegation of corruption and the firm concerned automatically blacklisted.

Under the new policy, sources said, there will be no clause for automatic blacklisting. The punishment for corruption and wrongdoing by a defence manufacturer will be applied in a graded manner. After receipt of an initial complaint, the procurement process will be put on hold for a few weeks for a basic enquiry into the merits of the charge. If the charges are substantial and prima facie hold merit, it will lead to a suspension of the firm pending a full investigation.

Once the charges of wrongdoing have been proved, there will be graded fiscal penalties applied against the erring firm. Only in extreme cases will the defence ministry resort to blacklisting of a company.

Currently, a company can be barred from contracting with the government as soon as suspicion of wrongdoing emerges, and it remains blacklisted throughout the investigation. If the firm is prosecuted and convicted, it can be debarred for up to 10 years.

The policy of immediate blacklisting had stalled India’s defence acquisitions programme under the UPA and raised concerns about the preparedness of the armed forces. It was also being used, many defence manufacturers allege, to create monopolies by getting their competitors blacklisted on anonymous charges of wrongdoing.

The Dhirendra Singh committee on revision of DPP had also recommended that while “a robust system of preventing corruption is put in place and punishment for corrupt practices is swiftly meted out, it does not hamper ongoing purchase efforts”.

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