Amid growing concerns among private defence manufacturers regarding the number of government contracts, defence ministry has formed an internal committee to finalise the strategic partnership model. The committee, headed by director general (acquisition) in the defence ministry, has been asked to submit its report by July 31. The first meeting of the committee is scheduled for Friday.
“We had raised this issue with the principal secretary to the Prime Minister last month during our meeting. Virtually no orders have been given by the defence ministry to the private sector so far. The ministry seems to be waiting for the strategic partnership model to be finalised before giving orders,” CEO of a top private defence manufacturing firm told The Indian Express. Since the BJP government came to power, the principal secretary to the Prime Minister has been holding periodic review meetings with the industry and defence ministry officials to give a push to defence manufacturing under Make in India.
The strategic partnership model, under which the government is to select a private Indian defence firm to exclusively make a military platform for a specified period of time, was proposed in July last year by the Dhirendra Singh Committee. The defence ministry then formed an expert committee headed by former DRDO chief, VK Aatre, to formulate the criteria for selection of strategic partners. Based on its report, defence minister Manohar Parrikar formed five sub-groups headed by top officials of private firms, to comment on the Aatre Committee report. As reported by The Indian Express on May 26, these five sub-groups made their presentations to the defence minister. Two people involved with the presentations said that many recommendations of these sub-groups were conflicting. Two of the sub-groups, they said, could not even agree upon a set of recommendations.
“The new internal committee has been made to study these presentations, reconcile the differences and come with a final proposal,” said a government source. Besides DG (acquisition), the committee has the secretary (defence finance), joint secretary (industrial cooperation), a representative from the Defence Research and Development Organisation and senior officials of the three defence services.
But private Indian defence manufacturers are worried about the delays already caused in the process. “By chasing the concept of strategic partnership, the ministry is causing further delays in the existing programmes such as the Naval Utility Hellicopters, P-75(I) submarines, recce and surveillance helicopters and combat aircraft,” said an executive of a private defence firm.
Experts feel that there are fundamental issues with the strategic partnership model which are difficult to be resolved at this stage. Amit Cowshish, a former financial advisor (acquisition) in the ministry and says that “there is a lack of clarity on what the strategic partnership means. The ideas that are being bandied around, if I may say for the want of a better word, are nonsensical. They are talking about awarding the contract to a private player on ‘cost-plus basis’. The ministry has no expertise to do this, and we will get objections from other competitors and likely objections from the CAG.”
The ministry, government sources said, is keen on the strategic partnership model. Cowshish, however, argued that “the defence ministry has to be practical about it. The procurement cases must move forward without waiting for this model. We first need to create capability in the ministry before implementing the model. That should be our focus now.”