Some of the blacklisted firms are likely to approach the Defence Ministry soon seeking reprieve as the government prepares a new list of banned companies following the new policy which proposes a mixture of heavy fines and graded banning. Defence Minister Manohar Parrikar had last month said the Director General (Acquisition) would draw up a list as required under the new policy and hence old cases would also be looked into.
“That does not mean they will be taken out. Don’t interpret… They will be examined. What is the status, how many years they have been blacklisted for and why were they blacklisted?” Parrikar had said. Since 2005, the Defence Ministry has blacklisted six overseas companies, including Singapore Technologies Kinetics, IMI (formerly Israel Military Industries), Rheinmetall Air Defence of Singapore and Corporation Defence of Russia, from doing business in the capital over allegations of corruption.
In 2014, AgustaWestland’s contract for purchase of VVIP helicopters was canceled following allegations of corruption. Leonardo-Finmeccanica of Italy and its group companies are now kept out of future defence projects. Industry sources said some of the companies are likely to approach the ministry soon seeking more clarity on the process as the government does away with blanket blacklisting.
The earlier policy of blanket blacklisting was something which the forces were unhappy about as it proved detrimental to their modernisation plans. Some of the firms like Singapore Technologies have approached court seeking removal of blacklisting. Singapore Technologies’ argument is that it has been wrongly blacklisted since no contract was ever awarded to it and neither is it mentioned in the charge sheet filed by the CBI in connection with a bribery case involving the then Ordinance Factory Board chief.
Under its new liberalised blacklisting policy for arms companies, India will now be open to doing business even with a banned firm if there is no alternative available to its weapon system or equipment in the market. Another key element of the new policy is that unlike the blanket ban of 10 years, the government has said that ban on serious defaulters will be for minimum five years. The policy does not mention the maximum time period. It also calls for banning of agents or employees of a company who are convicted of any act of impropriety. The new policy also says that orders of banning business dealings with an entity may be extended to its allied firms by specific order of the competent authority.