Defence blacklisting policy likely to be delayed again

The release of the much-awaited blacklisting policy meant to check rampant corruption by some foreign defence firms is likely to be delayed even further.

The policy was finalised during a meeting of the Defence Acquisition Council, chaired by Defence Minister Manohar Parrikar, on November 7. It was then said the policy will be released officially within a few days.

However, it seems that the final provisions of the policy are still being vetted and it may be end of the month or early next when it will be released, sources told BusinessLine .

The decision to introduce a new blacklisting policy, which may be renamed as Debarment Policy, was taken to kick-start projects worth around ₹50,000 crore that were stalled due to the earlier practice of imposing a blanket ban on companies that were being accused of resorting to unlawful means to grab big-ticket defence deals.

It is also not yet clear whether the policy will be implemented retrospectively or prospectively. The Indian industry has made several representations to the government that it be applied retrospectively as a number of projects were stalled due to a blanket ban imposed on the companies, as a result of which, even their subsidiary units were not allowed to do business.

This, in turn, has impacted Indian defence firms that have collaborated with some of the international OEMs for projects. The Defence Ministry has, apparently, told the Indian industry that a case-by-case review will be done for projects stalled due to a blanket ban on firms, sources said.

However, the industry opinion is that a case-by-case review will lead to “delays and discretion” and may eventually stall projects, leading to shortages of critical weaponry and defence systems required by the armed forces.

For example INS Kalaveri, one of India’s six Scorpene-class submarines, had its first sea trial without the initially planned Black Shark torpedoes, as was originally planned, that was manufactured by WASS. The procurement of torpedoes was stalled midway because WASS turned out to be a subsidiary of Italian Finmeccanica, which was blacklisted due to the AgustaWestland VVIP chopper scam.

“The new policy must be comprehensive enough to ensure that no loose ends are left to be tied at time of implementation. For instance, it is almost certain that only the offending company, and not the entire group of companies to which it belongs, will face the consequences of transgression under the new policy,” said Amit Cowshish, former financial adviser to the Defence Ministry and Distinguished Fellow, Indian Institute for Defence Studies and Analyses (IDSA), in a note.

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