1. Indian Army modernisation: Defence contractors may find a new lease of life now

Indian Army modernisation: Defence contractors may find a new lease of life now

Though the Comptroller and Auditor General of India, in a recent report, was right in blaming defence PSUs for delays in fulfilling contracts and hampering the capability enhancement plans of the Indian Army, the government’s arbitrary regulations are also partly to blame for the stagnation of modernisation of armed forces.

By: | Published: November 23, 2016 6:16 AM
The blacklist policy—that saw many top suppliers and associated firms banned by successive governments, for a minimum of ten years, when they were found guilty of graft—shrunk the pool for the armed forces acquiring ammunitions by that much. (Reuters) The blacklist policy—that saw many top suppliers and associated firms banned by successive governments, for a minimum of ten years, when they were found guilty of graft—shrunk the pool for the armed forces acquiring ammunitions by that much. (Reuters)

Though the Comptroller and Auditor General of India, in a recent report, was right in blaming defence PSUs for delays in fulfilling contracts and hampering the capability enhancement plans of the Indian Army, the government’s arbitrary regulations are also partly to blame for the stagnation of modernisation of armed forces.

The blacklist policy—that saw many top suppliers and associated firms banned by successive governments, for a minimum of ten years, when they were found guilty of graft—shrunk the pool for the armed forces acquiring ammunitions by that much.

Now, the government has done well to find a middle path with new guidelines that bring down the ban to a minimum of five years and also allow for a review of the ban every six months.

The guidelines also state that, in case one of these firms were to win a bid, they would be able to service the contract if they are cleared within the stipulated time period.

While bans are necessary given the graft in awarding of defence contracts—a report by Transparency International awarded a category D to India, indicating high vulnerability to corruption—these have to be reasonable.

Most important, some measures, like the ban on Finmeccanica—where the whole firm was blacklisted as one of it’s subsidiaries, AgustaWestland, came under investigation for bribery—need a thorough review, so that other subsidiaries are able to fulfil their contracts, even if the one under ban cannot.

With reports stating a fall in the country’s military might and an urgent need to upgrade infrastructure, the government has to get more rational on defence deals.

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