Defence Industry

Defence Purchases: time India asserts itself
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Issue Vol 24.4 Oct-Dec2009 | Date : 19 Jan , 2011

The above methodology will provide two stage screening of all vendors. Initially at the time of selection of vendors for the issuance of RFP, inputs can be obtained from the data bank of past contracts as recommended above. Names of perpetual defaulters could be deleted. Second screening could be by the General Staff at the time of preparing staff evaluation report as considerable time would have elapsed between the issuance of RFP and the completion of technical evaluation. Even if a regular defaulter’s equipment clears technical testing, the case could be debated by the Defence Procurement Board – whether to allow him to participate in commercial evaluation or to summarily reject him for poor track record.

Also read: Defence Production Policy: A Positive Change – CII

Most importantly, contracts should be drafted with utmost diligence and care. Failure to comply with contractual provisions should attract deterrent punishment. All punitive clauses must be spelt out in unambiguous terms. Competent financial and legal advice should be made available to Commercial Negotiation Committees.

It is time India appreciates that it is purchasing military system against hard cash. Days of getting redundant equipment from friendly nations at subsidised rates are over. As a buyer it must assert its rights to safeguard its interests and impose deterrent penalties on willful defaulters. In case a vendor displays deliberate disregard for the letter and spirit of a contract, India should not hesitate to cancel the said contract and demand full refund. Such a step would send a strong and unambiguous message to the world arms community that India would brook no deviation from contractual obligations. Even at the cost of having critical deficiencies temporarily, India should not give in to arm-twisting.

Also read: Fight the terrorist like a terrorist

Reportedly, India is expected to spend in excess of 30 billion dollars on new defence procurements during the next five years. With imports averaging 70 percent of total defence procurements and offsets pegged at 50 percent of contract value, the quantum of offset business generated would be over 10 billion dollars. When the likely expenditure of 10 billion dollars on homeland security is also added, the total value of defence and homeland security business would swell to mind-boggling 50 billion dollars. Therefore, India must put an effective system of penalising defaulters in place. It can ill afford to be shortchanged by deceitful vendors.

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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Maj Gen Mrinal Suman

is India’s foremost expert in defence procurement procedures and offsets. He heads Defence Technical Assessment and Advisory Services Group of CII.

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