Economy | Defense

Parrikar planning new policy to blacklist defence suppliers

AKSHAY DESHMANE/ET BUREAU, PANAJI | 17 November 2014 18:10 IST

Defence Minister Manohar Parrikar is considering the introduction of a new policy on the vexed issue of blacklisting defence equipment suppliers accused of corruption as well as reforming rules for lobbyists to balance the needs of the armed forces with transparency.

Speaking to ET in the state capital at the chief minister's residence, Parrikar said, "One of the ideas the government is thinking about is how to ensure transparency in dealing with representatives of defence companies and also the policy of blacklisting those companies."

Parrikar, who has been briefed on these issues by top officials after taking charge, said a fair amount of documentation was ready as his predecessor Arun Jaitley had initiated changes in these areas.

Parrikar was in Goa to ensure a smooth transfer in the coastal state of which he was the CM before being moved to the Centre as the defence minister in the November 9 Union Cabinet expansion.

"There are things about administration which only a chief minister knows. Some files are only with the CM or just about one bureaucrat. So I had to brief him (new CM Lax-mikant Parsekar) on key matters. I had only two days to decide on Modiji's suggestion about becoming the defence minister," he said.

Elaborating on the complications and grey areas in dealing with the issue of lobbying, Parrikar said some aspect of lobbying could be allowed.

"Lobbying fee needs to be clearly defined. The activity, till it pertains to transparent representation of defence companies' products and other things, can be regulated and allowed. Actually, I would prefer the word 'representation' and not 'lobbying'.

After all, if these companies have to sell equipment here, they or their representatives will need an office from where they work, and provide data and information which is reliable for us to make informed decisions."

He also emphasised that he was "thinking aloud" on the matter and these thoughts should not be taken as final opinion.

Soon after coming to power, the Modi government had begun reviewing UPA-II regime's policy of so-called 'blanket blacklisting' of defence equipment suppliers under which commercial dealings with vendors facing corruption inquiries were prohibited.

In late August, Jaitley had announced a modification of this policy to ensure supply of spares for equipment already purchased by the forces.

He had also cited the need to balance concerns of transparency with the requirements of the armed forces, as the pace of defence procurement had slowed in the past 2-3 years following allegations of kickbacks and corruption during UPA years. This has further delayed modernisation and upgradation of security forces.

"If you (do blanket) blacklisting of defence companies, they will blackmail you, since a lot of equipment has already been purchased and requires spares for maintenance. Also, to give just one example of the fighter jets, there are not many manufacturers around. So if we blacklist half of them, our buying options are curtailed. As it is, there will be some among them who won't sell (to) us for strategic reasons, like the Chinese, for example. So, it needs to be decided clearly about blacklisting for what period and which product from a company, since the companies sell different products in different countries."

For his part, Parrikar appears to have brought in a sense of urgency in the ministry on this front, as the three service chiefs have been asked to prioritise their demands and prepare for the meeting of the Defence Acquisition Council (DAC), a structure under the defence minister to deal with acquisitions.

It consists of the defence minister, the chiefs of the Army, Air Force and Navy, the minister of state and the defence secretary.

Original Report

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