 "Scorpene submarine")
The Ministry of Defence (MoD) has reduced the 10-year ban duration imposed so far on defence equipment manufacturers found involved in corrupt practices to a five-year period.
The new ban period was announced by the ministry on Monday under its 'Guidelines of the Ministry of Defence for Penalties in Business Dealings with Entities'. Under it, the government has said that ban on serious defaulters will be for a minimum of five years. The maximum duration of such a ban was not listed.
A spate of black listings in past years, which left prominent global defence equipment manufacturers unable to compete in Indian defence acquisition programmes, has reportedly stymied modernisation programmes being undertaken by the Indian armed forces. In fact, blacklisting one firm or subsidiary has in some cases had a cascading effect on the country's defence preparedness.
The new policy moves away from blanket blacklisting and employs a mixture of heavy fines and graded banning.
Review all cases
Aside from reducing the ban period for serious defaulters, under the new policy, the Defence Ministry will review all cases of blacklisted firms as it prepares a new list of such entities.
Defence Minister Manohar Parrikar on Tuesday said that the director general (acquisition) will draw up a list as required under the new policy and hence old cases will 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 they were blacklisted," Parrikar told PTI on the sidelines of a seminar in the capital.
He said that under the new policy, there would be a new list. "So the list will have to be re-ascertained," Parrikar said.
The review will include about a dozen firms that came under blanket blacklisting in the previous UPA government. "An updated list of entities with which business dealings have been suspended or banned by the competent authority and/or against which financial penalties have been imposed shall be maintained on the official website of the Ministry of Defence," the policy read.
Defence expert Ajai Shukla explained how the policy of blanket blacklisting could hamper the forces' preparedness (Read more). Even as India's first Scorpene submarine was undocked last year, the navy was battling the possibility of seeing its new cutting-edge submarines patrolling the waters without torpedos. Back then, Shukla had explained that the Black Shark torpedo meant for the Scorpene had been blocked by a MoD ban on Whitehead Alenia Sistemi Subacquel (WASS) of Italy.
WASS is a subsidiary of defence giant Finmeccanica, which the MoD proscribed after another subsidiary, AgustaWestland, came under investigation the AgustaWestland VVIP chopper scandal.
India is open for business
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.
This can be done on the grounds of national security, operational military readiness and export obligations, after the vice-chief of the armed service concerned, the chief of the integrated defence staff or the additional secretary (defence production) signs a certificate to that effect and gets permission from the "competent authority", who is the defence minister.
Reasons why companies can get banned
The new policy lists out the reasons for which companies can get banned:
- Violating the integrity pact would be treated seriously under the new policy
- Indulging in corrupt practices would similarly be treated seriously under the new policy
- Endangering the national security of India would also be treated most seriously
- Non-performance by the defence company would invite a less harsh penalty, and in such cases the duration of the ban would not exceed three years.
The new policy says that orders of banning business dealings with an entity may be extended to its allied firms by specific order of the competent authority.
It also makes it clear that the period of suspension of business dealing with an arms company shall not ordinarily exceed one year pending a probe into the corruption allegations.
A review of the suspension order will be undertaken every six months. The suspension time can, however, be extended for additional six months.
"The total period of suspension of business dealings with an entity shall not exceed the maximum period of banning of business dealing with an entity for the same cause of action," the policy read.
It also calls for banning of agents or employees of a company who are convicted for any act of impropriety.
