1. Defence production: Cloud hangs over SP model as a part of private sector pushes for ‘grandfather rights’

Defence production: Cloud hangs over SP model as a part of private sector pushes for ‘grandfather rights’

A section of domestic private-sector firms has pushed for grandparent rights to have access for the next 50 years to their chosen segments without competition

By: | New Delhi | Published: May 12, 2017 6:50 AM
At the meeting, sources revealed that armed forces and a large section of the industry favoured open, transparent and competitive process for selection. (PTI)

Uncertainty continues over the strategic partnership (SP) model for defence production as a section of the domestic private-sector companies has pushed for grandparent rights to have access for the next 50 years to their chosen segments without competition.

In its consultations on SP, the ministry of defence andmajor defence companies, including L&T, Bharat Forge, Mahindra Group, Tata and others, talked about various issues related to the model with defence minister Arun Jaitley and defence secretary G Mohan Kumar on Thursday.

Sources told FE, “During the meeting, some industry players protested against such a step as it creates monopoly for just a few companies. For various defence platforms, technology as well various processes, keep changing. Hence, it will not be a viable move to give grandparent rights.”

At the meeting, sources revealed that armed forces and a large section of the industry favoured open, transparent and competitive process for selection. “As, due to the lack of transparency, subjectivity at stage II and stage III in the selection process for any project in the proposed plan will lead to malpractices.”

A handful of companies insisted on getting almost 50 % weightage in the existing infrastructure in the commercial bid. However, some industry players opposed grandparent rights and restrictive conditions which will limit the number of SPs. Incidentally, DRDO chief VK Aatre had suggested, among other things, only one or two partners for each sector in his report to the MoD.

While the SP policy aims to boost the “Make in India” initiative, “such a model is expected to lead to long-term delays because four segments run sequentially in any production”, said a source. As per the recommendations made by a task force under Aatre, four projects are expected to be taken up in the first phase of the strategic partnership project.

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    PR Shankar
    May 13, 2017 at 8:23 am
    The strategic partnership model is flawed. It will lead to monopoly. Systems will be forced on the the forces even if they are not up to the mark. The concept promotes exclusivity and not inclusiveness. Transparency will be compromised. Has anyone done a cost benefit analysis? Who has selected the strategies partners? Too many questions without answers.....
    Reply

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