India thus, expects a foreign investor to invest his resources in a venture where he has no significant control, strict capacity/product constraints, no purchase guarantee, no open access to other markets (including exports) and an unfair advantage to the local public sector. Such an expectation defies logic. No wonder that the response has been highly lukewarm so far. Many feel that such a dissuasive policy was destined to be a damp squib.
Official Apathy
Britain has constituted Defence Suppliers Service (DSS) in MoD. It is a small team of experienced staff that performs the functions of a focal point for companies interested in becoming defence suppliers. DSS staff interacts with company representatives and advises them regarding procedures and opportunities. It also highlights the need for third party Quality Assurance certification and outlines some of the current major initiatives in the field of defence acquisition and the roles of various parts of the MoD.
India has no designated agency to help aspiring vendors who want to do business with defence. It is for the vendors to fend for themselves. For new entrants, it is a highly intimidating task. No one tells them about the procedures and the contact persons. Many private sector companies have the capability to manufacture the whole range of defence requirements but do not know whom to approach to ascertain details. They are ignorant of the procurement agencies, their policies and procedures. This ignorance makes them wary of dealing with the defence.
The Confederation of Indian Industry has been taking a number of creditable steps to acquaint companies with Indian defence procurement regimes. It conducts highly acclaimed Defence Acquisition Management Course periodically and also provides assistance to the aspiring companies through its specialised Defence Technical Assessment and Advisory Service. Sadly, there has been no Government initiative in this direction.
The British System
MoD is the British industry’s largest single customer with 32,000 suppliers. It has around 1,800 buyers committed to purchasing high-quality goods and services at the most economic prices and best value for money terms. MoD has put in place a highly responsive and effective system to assist and support both suppliers and buyers within the defence industry by providing access to a wide variety of information at different levels. It has adopted an approach of providing reasonable opportunity to all companies to compete in an impartial and consistent environment through maximum publicity of defence purchases.
DSS carries out the following functions:-
Preferential treatment of the public sector is contrary to the stated aim of “˜open and equitable competition. Purchase preference granted to the public sector cannot be justified at all. Nothing causes more damage to the credibility of a system than playing favourites.
- Explains Defence procurement procedures.
- Publishes and distributes information brochures.
- Provides product requirement advice.
- Supplies details of local defence procurement contacts.
The Defence Contracts Bulletin (DCB), published by the DSS, is available both in print and wire editions. It provides a gateway to new business opportunities for companies, large and small, who wish to compete for defence business either directly as a main contractor or indirectly as a sub-contractor.
Defence procurement website provides total guidance to companies as regards doing business with the MoD. It also contains a host of related information and a wide variety of links to other procurement-related sites. Guide to Defence e-Business is designed to explain the various applications and techniques that are used or could be used in commercial relationships between the MoD and its industrial partners.
‘Selling to the MoD’ is a comprehensive guide published by the DSS to explain how a company may become a defence supplier at prime, sub-contract and local purchase level. The brochure also provides points of contact for exports, standardisation, research, diversification and many other key areas.
Recommendations
Every responsive procurement regime is readily recognised by the presence of a number of features which contribute to its functional effectiveness, as is seen in the British system. In case the Indian Government is really serious about reforming the defence business environment, it has to develop a positive approach towards business entities and initiate major changes with respect to the following:-
- Equitable policy directions.
- Procedural changes.
- Creation of supportive structures.
Innovative, Unambiguous and Vibrant Policy Framework
The Government of India had set up a committee under Mr Vijay Kelkar to recommend measures to bring about improvements in defence acquisitions and production.The Committee commenced work in July 2004 and submitted its report in two parts in April 2005 and November 2005 respectively. Although the Government has accepted most of its recommendations, implementation on ground has been tardy.
Please wait...
