Our Bureau
07:49 AM, February 22, 2016
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Former DRDO Chief VK Aatre

Indian defense ministry officials will be meeting the armed forces to discuss blacklisting policy and the report on strategic partnership on Tuesday.

"The report on strategic partnership submitted by former DRDO Chief VK Aatre will be discussed during a Defense Acquisition Council (DAC) meeting chaired by Defense Minister Manohar Parrikar on Feb 23," PTI reported quoting unnamed defense sources as saying Sunday.

While the ministry has already firmed up the new Defence Procurement Procedure, the issue of blacklisting of defence firms accused of corruption remains. This will also be discussed during the meeting.

Parrikar has said that random and complete blacklisting of firms hampers defence modernisation, a view shared by the armed forces as well.

But the main issue the defence firms are interested in is the Aatre report, which has recommended that one company cannot be eligible for multiple partnerships.

This means that each company would be restricted to just one critical segment in the overall multi-billion dollar defence manufacturing sector.

The task force in its report has divided the sectors eligible for strategic partnerships into two groups.

Segments in Group 1 are aircraft, helicopters, aero- engines, submarines, warships, guns (including artillery guns) and armoured vehicles, including tanks.

In Group 2, the segments are metallic materials and alloys, non-metallic materials (including composites and polymers) and ammunition, including smart ammunition.

However, it has recommended that in the initial phase, aircraft, helicopters, submarines, armoured vehicles and ammunition be considered for strategic partnerships.

The feeling among private industry players is that only the big firms will benefit out of this.

However, even the large firms are not for the idea since they feel they would be restricted to just specific fields and, therefore, their overall investment and plans will get affected.

An official in a defence firm, who did not want to be named, said, “It creates the grounds for nomination of a private sector business partner for award of defence contracts on an exclusive basis in each of the major categories in defence production.”

Claiming it may herald a return of “crony capitalism”, an industry source said, “The Aatre process could enable the big five of the Indian private sector defence industry to corner about 80 per cent of the business and create monopolies in all categories.”

Also, “restricting one group to one platform is unprecedented. Globally, every large defence firm has a land, air and naval segment”, a defence company official said.

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