Wednesday, 21 May 2008

MoD embarrassment in Berlin: new offsets policy not ready

By Ajai Shukla
Business Standard: 19th May 08


At 2 pm on 28th May, red-faced MoD officials in the Berlin Air Show could stumble yet again on an international stage. At a keenly anticipated two-hour seminar on “Opportunities in the defence sector in India”, a global audience of arms company executives will find a panel of top MoD officials explaining an old, soon-to-be-outdated set of procurement rules, rather than the much-awaited new rulebook. The new Defence Procurement Policy – 2008 (DPP-2008) was promised more than a year ago. 

The latest delay has surprised even the MoD, which had confidently predicted that DPP-2006 would be ready for Berlin (Business Standard, 8th May 08). This delay, it now emerges, has arisen because the MoD failed to consult with the army, navy and air force while drawing up the new rules. A meeting of the high-level Defence Procurement Board (DPB) last Friday, which was expected to clear the DPP-2008, found itself dealing instead with some 40 points raised by the three services.

The MoD, in a hurry to push through the draft DPP-2008, has conceded many of the points raised by the military. But the DPB meeting on Friday, chaired by Defence Secretary Vijay Singh, was forced to put off the consideration of several remaining issues to another DPB meeting on 23rd May. With Mr AK Antony departing for Berlin on 26th May, sources indicate that time has run out for obtaining final clearance from the top-level Defence Acquisition Council (DAC) and then promulgating DPP-2008 through the defence minister.

MoD sources admit a serious miscalculation in not consulting the three services while drafting the new regulations, since the points raised at the latest DPB meeting are entirely valid. Senior army officers point out that the new rules will directly affect the flow of weapons and equipment to the military; their inputs, they say, are relevant and necessary.

For example, the army pointed out that when a joint venture (JV) between an Indian and a foreign company wins a contract to build military equipment in India with technology supplied by the foreign partner, the Indian JV partner should automatically be entitled to manufacture the equipment. Currently, paragraph 19 of the draft DPP-2008 allows the MoD to “nominate” any Indian entity to manufacture the equipment.

Many of the JVs currently being tied up are rooted on the premise that the Indian partner will automatically have the right to manufacture the goods for which a contract is won. In this context, says a private Indian defence manufacturer who does not wish to be named, the MoD can hardly retain the right to “nominate” a company (traditionally a defence PSU) for manufacture.

If the MoD is, as seems likely, unable to promulgate DPP-2008, it will be only the latest failure to meet an important deadline. Already, at the Defexpo India 2008, in February in Delhi, arms vendors had been disappointed that the new rules were not yet ready. DPP-2008 will govern the purchase of an estimated Rs 300,000 crores worth of military equipment over the next five years.

4 comments:

Anonymous said...

There are no bigger bunch of idiots in india, than those in the MOD. What effin fools to not have conducted the services when drawing up a document on defence offsets. The MOD is directly responsible for the parlous state of indian procurement today.

Anonymous said...

The policies when initiated are well intentioned but by the time they reach implementation stage so many compromises are made that the policy can not be implemented. This particularly so in MoD where you have God knows how many secretary level officers and it becomes pretty much impossible to coordinate and achieve a consensus. So, first reduce the size and the weight of the bureacracy in MoD and in Services Headquarters. Until then, embarassments will continue to be the rule rather than exception.

Ankur said...

"the MoD failed to consult with the army, navy and air force while drawing up the new rules"

I'm sorry, but *What*?!

Can we be expecting somebody's job to be advertising soon? Let's hope that the media keeps the pressure on the morons at the MoD to cough up a scape goat - preferably the designated head of the rulebook.

Anonymous said...

"MoD embarrassment in Berlin: new offsets policy not ready"
"This delay, it now emerges, has arisen because the MoD failed to consult with the army, navy and air force while drawing up the new rules"

India is importing several thousands of crores military hardware year after year. The policy evolved should address India's concern on what and how the Country get the benefit when such expenditures are incurred by the Govt. One should not be swayed away by the so called"disppointments" of countries that are waiting on wings to merely export hardware and any real technologies that would reduce long term permamant dependence on them for ever. So it is not correct to pressurize MoD to accept all that what "they" want us to include in "our" policy so that it is easy for "them". Ones gets worried if what you state is correct that is "the MoD, in a hurry to push through the draft DPP-2008, has conceded many of the points raised by the military"