Defence manufacturing projects: DAC to decide on pvt participation today

One key proposal is to consider a consortium of Indian defence firms as an entity

By: Express News Service | New Delhi | Published: May 20, 2017 3:35:00 am

The defence ministry has scheduled a meeting of the Defence Acquisition Committee (DAC) on Saturday with an aim to finalise the much-delayed Strategic Partnership (SP) model for selection of Indian private firms for defence manufacturing.

The SP model has been a brainchild of the previous defence minister, Manohar Parrikar and has gained momentum under Arun Jaitley. The original proposal has been extensively debated and significantly amended but three major areas of disagreement remain within the defence ministry.

One of the key changes being proposed now is to allow a consortium of Indian defence companies to be considered as an entity. Earlier only companies of the same industrial group were to considered as an entity.

The second area of disagreement is for a commitment for follow up orders to the company which has been selected as a SP initially. While this is needed to ensure that private firms which have made a heavy investment get adequate returns, sections of defence ministry feel that this cannot be guaranteed in government contracts.

Another disagreement in the ministry is over the approving authority for the policy on SP model. One section of the ministry contends that the new policy needs to be taken to the Cabinet Committee on Security (CCS) while the other side argues that it is a part of the new DPP, which was issued last year. As the SP Model will form part of the DPP as Chapter 9, and the DPP was itself not taken to the CCS for approval, there is no need for this policy to be sent to CCS.

The defence minister will have to decide on these issues in the DAC which will be the last one for the present Defence Secretary, G Mohan Kumar, who retires on May 25. The policy will have far-reaching impact on private defence manufacturing in India and is being keenly awaited for by the private companies.

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