Section I – Policy Directives
The aim should be to keep the environment abreast of all the up-to-date developments that affect regular functioning. This section should include latest policy changes and clarifications/amplification of various provisions. It should also notify changes in equipment philosophy, procurement structures and functionaries. This section should also contain non-classified aspects of Annual Acquisition Plans with a compendium of important Government policies as a handy reference book.
As India is a new entrant, its offset policy is under evolution. There are large gaps, both in structures and policy. There is no single empowered authority to oversee the complete gamut of offset activities.
Section II – Procurement Matters
This section should act as a single-point official source of all business opportunities for companies who wish to compete for defence business, either directly as a prime contractor or indirectly as a sub-contractor. In addition to containing information regarding technological developments and latest trends in military equipment, this section should contain details of all impending procurement proposals and anticipated defence requirements. It should be mandatory for every procurement agency to notify all procurement orders having an indicative value of over Rs 20 crores.
All Requests for Information (RFI) must be published to enable prospective vendors to carry out product adaptation. The endeavour should be to provide adequate advance information of all forthcoming requirements, both in terms of performance parameters and quantities. It will help prospective vendors to get forewarned about impending RFP and can get their names included in the approved vendors list.
MOU signed between foreign vendors and Indian companies, impending procurement proposals and emerging business opportunities in overseas defence markets.
Section III – Offset Aspects
Offsets have become an integral part of India’s defence procurement policy, with offset business likely to exceed USD 30 billion in the next ten years. As India is a new entrant, its offset policy is under evolution. There are large gaps, both in structures and policy. There is no single empowered authority to oversee the complete gamut of offset activities. Similarly, major ambiguities exist as regards approval, validation, discharge and measurement of offset contracts. This section of DPC should deal exclusively with offsets and carry policy changes. Clarifications should be provided in respect of common doubts. MoD can also indicate its preference for specific sectors in which offsets are desired.
It is therefore essential that MoD prepares an exhaustive compendium to help procurement agencies to increase vendor base by issuance RFP to a larger number of companies.
Section IV – Progress Update
This section, if managed with an open mind will provide a quantum boost to transparency and enhance credibility of the system. It should carry details of RFPs issued, trials in progress, selection of technically acceptable vendors, placement of orders and contract management. Progress of offset programmes and phased fulfillment of obligations should be made public on regular basis.
Revelations made in the progress reports will also put pressure on vendors to strictly adhere to implementation schedules lest they invite adverse publicity. Similarly, offset obligors will be forced to achieve contracted production targets, fearing being seen as defaulters. It will also make the concerned officials to monitor progress more diligently.
The existing communication gap between the numerous procurement agencies of MoD and Indian industry deters new aspirants. Through the issuance of DPC, MoD can act as a facilitator for the stress-free entry of small/medium enterprises and instill confidence in the fairness of Indias procurement regime.
Section V – General Reading
Thought provoking and analytical articles should be published in this section to generate new ideas for streamlining the system for optimum efficiency. Features carrying market researches/surveys and analysis of business environment will help companies take more-informed decisions. With a view to promote exports, relevant information regarding availability of business opportunities abroad should also be made available.
As regards the second recommendation, MoD must prepare a compendium of credible defence manufacturers. There is no data bank of Indian industries available at present. Resultantly, only a handful of highly visible and well-known companies are invited to bid for defence contracts. A number of other companies who possess the necessary competence lose by default. It is therefore essential that MoD prepares an exhaustive compendium to help procurement agencies to increase vendor base by issuance RFP to a larger number of companies. The said compendium will also prove useful for foreign buyers as they can identify Indian companies for the placement of orders. Further, foreign producers can make use of the compendium to identify suitable Indian partners, both for
co-production and offset fulfillment.
A word of caution will be in order here. Issuance of DPC will be intensely resisted by most procurement agencies. They are opposed to centralised publication of their tender documents. They want to continue with the current practice of limited regional publicity. It helps them to restrict the vendor base to patronise the favoured few. Issuance of tender documents to local vendors facilitates ring/pool/cartel tendering, in which procurement officials collude with a coterie of vendors to resort to the unethical practice of awarding contracts to venders by rotation. It defeats the very purpose of open and competitive bidding and allows the nominated vendor to hike his bid considerably. Therefore, MoD will have to be firm and force all procurement agencies to advertise their procurement schedules in DPC.
Finally, effectiveness of any regime is primarily dependent on the credibility that it enjoys. It can only be achieved by total transparency in defence deals. Many misplaced and unfounded misconceptions get removed when facts are made public in an honest and forthright manner. The existing communication gap between the numerous procurement agencies of MoD and Indian industry deters new aspirants. Through the issuance of DPC, MoD can act as a facilitator for the stress-free entry of small/medium enterprises and instill confidence in the fairness of India’s procurement regime. In addition to advising companies as regards procedures and opportunities, it should keep them informed of all procurement proposals. Similarly, compendium of Indian defence companies will provide a ready data base of vendors to MoD.
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