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Centre approves liberalised blacklisting norms for arms companies to ensure military readiness not hit

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by November 7, 2016 General
NEW DELHI: India will no longer impose blanket bans on armament companies suspected of corruption. Moreover, companies will be blacklisted only for a year at a time, instead of the existing norm of 10 years at a go, with fast-track investigations into the charges against them.

Striking a balance between the need to effectively punish corruption but also ensure military modernisation does not get adversely impacted, the defence ministry on Monday approved a new liberalised blacklisting policy with graded punishments and fines commensurate with the kind of wrong-doing committed by arms companies.

The defence acquisitions council (DAC), chaired by defence minister Manohar Parrikar, approved the new guidelines for suspension or banning of business dealings with arms companies, which will be made public in the next few days.

The DAC also accorded initial approvals or “acceptance of necessity” to modernisation projects worth Rs 82,117 crore (see below). The approvals, which will eventually lead to actual contracts or deals being inked, range from the procurement of 83 Tejas Mark-1A fighters and 464 T-90 main-battle tanks to six additional regiments of the indigenous Pinaka multiple-launch rocket systems.

But the clear takeaway was the new blacklisting policy. Under the earlier banning of arms companies, which especially became the norm under defence minister AK Antony, military modernisation projects often went for a complete toss and compromised operational readiness.

“Under the new policy, the decision to blacklist a company will not be an executive one. It will be done in a collegiate manner by a committee, which will also include the vice-chiefs of the Army, Navy and IAF,” said a source.

“The operational implications of blacklisting a company will be considered before a final decision is taken. Blacklisting will be for a specific equipment or service, without blanket bans,” he added.

Under the new nuanced blacklisting norms, procurement of spares for platforms and equipment already purchased from a company under the scanner will be allowed. Moreover, companies already blacklisted will now also be able to appeal to the government for a review, based on merits of a case.

Moreover, blacklisting will be done for a specific period of not more than a year at a time, with the aim to complete investigations into the charges against a company within six months. “If the period of suspension for blacklisting has to be extended, it will have to be recorded in writing,” said the source.

This easing of the blacklisting norms will be a marked departure from the indiscriminate 10-year blanket bans imposed earlier. Four major global firms like Singapore Technologies Kinetics, Israeli Military Industries, Rheinmetall Air Defence, Zurich, and Corporation Defence, Russia, for instance, are blacklisted till 2022.

Similarly, the Army has not inducted a single advanced 155mm artillery gun for 30 years, first due to the infamous Swedish Bofors scams of the mid-1980s and then scandals around South African firm Denel and Singapore Technology Kinetics in later years. In effect, almost all the top artillery manufacturers around the world were banned at some time or the other.

The virtual blacklisting of Italian conglomerate Finmeccanica and all its subsidiaries after the VVIP helicopter scandal has also derailed several acquisition projects, ranging from new 127 mm naval guns to short-range missiles. The Rs 1,200-crore proposal to buy Black Shark heavy-weight torpedoes from a Finmeccanica subsidiary for the six Scorpene submarines under construction at Mazagon Docks, for instance, was scrapped.

Modernisation Projects Cleared By DAC

A) Tejas Light Combat Aircraft:

  • Initial approval for procurement of 83 Tejas Mark-1A fighters from Hindustan Aeronautics for Rs 50,025 crore
  • IAF has inducted 2 Tejas till now. By 2018, it will get the 1st full squadron (20 jets). Next 20 to follow thereafter
  • The improved 83 Mark-1A jets will be inducted from 2020 to 2026

B) T-90 “Bhishma” main-battle tanks:

  • Initial approval for procurement of 464 T-90 tanks from Ordnance Factory Board (OFB) for Rs 13,448 crore
  • 657 T-90S tanks were imported from Russia from 2001 onwards for Rs 8,525 crore
  • Next 1,000 being licensed by Avadi Heavy Vehicles Factory
  • New 464 tanks will add to 536 already ordered from OFB (300 inducted till now)

C) Pinaka multiple-launch rocket systems:

  • Floating of tender for 6 more Pinaka regiments for Rs 14,633 crore
  • Army has already inducted 2 of the 4 Pinaka regiments cleared earlier
  • Pinaka, with 40-km strike range, developed by DRDO. Manufactured by Tatas and L&T

D) Light Combat Helicopters:

  • Initial approval for procurement of 15 helicopters from HAL for Rs 2,911 crore
  • 10 choppers for IAF & 5 for Army. Over 100 to be progressively ordered
  • Indigenous chopper designed for air defence, anti-tank, scout & other missions

E) Mini-UAVs:

  • Initial approval for procurement of 598 mini-UAVs for Army for Rs 1,100 crore
  • India rejected Raven/Cheel mini-UAVs being offered by the US
  • Now, tender will be issued to Indian companies for the mini drones
  • Man-portable drones, with operational radius of 10-km, will provide surveillance for infantry soldiers

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