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Between 2007 and 2011, India concluded five offset contracts in the defence sector worth Rs 3,410.49 crore that were not in consonance with the provisions laid down in the Defence Procurement Procedure.
This is stated in the Comptroller and Auditor General’s (CAG) compliance audit report – Defence Services (Air Force and Navy) – that was tabled in Parliament on Thursday.
The report states that India concluded 16 offset contracts worth Rs 18,444.56 crore during the period.
“This was largely due to varying interpretation of various authorities about the legitimacy or otherwise of the offsets being offered. The Indian Offset Partners selected for offsets in some cases were not valid. The monitoring mechanism for implementation of offset contracts was weak,” the report adds.
An offset is a mechanism to partially compensate for the significant outflow of a country’s resources in large purchases of foreign goods and services by making the foreign supplier invest in industry, in research and development, among others in the buyer country.
The report adds that indigenously designed and manufactured ammunition worth Rs 408.06 crore was declared unserviceable without an internal investigation.
“The unresolved problems in the indigenous ammunition led to import of ammunition costing Rs 278.88 crore to meet the demands of the Army,” the report states.
Land for pvt firm
Meanwhile, a second CAG compliance audit report – Defence Services (Army and Ordnance Factories) – which was also tabled in Parliament on Thursday, states that Army authorities relinquished land measuring 5,166 sq metres valued at Rs 5.94 crore under their active occupation since 1942, to a private company based on an irregular NOC issued by DEO Mumbai.
“The Central Ordnance Depot failed to get the land transferred in its favour from the State Government authorities. Army headquarters, instead of investigating and defending its case, allowed the company to go ahead with the development work in the vicinity of military establishments thus compromising with defence security,” the report states.
The report also points out that Headquarters Southern Command allowed a private builder to divert defence land for commercial use in violation of Cantonment Land Administrative Rules, the original terms of lease and the court orders for reserving the land for married accommodation project by accepting an inferior property in lieu thus compromising the interest of the Army.
>ashwini.phadnis@thehindu.co.in
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