Defence procurement policy to undergo changes that might witness only single vendor situation, if latest proposals are to be implemented. As per the new guidelines, acquisitions will be carried on even if only a single overseas original equipment manufacturer (OEM) is shortlisted after competitive evaluation.
This is being initiated after giving to several delays in critical procurements while exercising the existing rules, where the procurement process has to be canceled and started afresh.
Giving greater opportunity to Indian private players in defence manufacturing is being considered for the final verdict in the proposed guidelines for Strategic Partnership (SP). What awaits is the clearance from the Defence Acquisition Council, followed by final approval of the Cabinet Committee on Security (CCS).
The proposed SP policy staters that, two or more OEMs should be preferred for each segment. Though, it further remarks that “Even if only one OEM is shortlisted, the process will be taken forward.”
However, concerns have raised heads from various quarters on the idea of selecting a single company on a long term basis.
The proposed policy has four segments covered — single engine fighter aircraft, helicopters, submarines and armoured fighting vehicles/ Main Battle Tanks (MBT). More segments could be added later.
With single engine fighter aircraft being marked on the agenda of procurement, the Indian Air Force is eager for the proliferation of the SP model to initiate the process as the new single engine fighters are to replace the Mig-21s, which are being phased out. The MoD had in the past broadly stated the need for fighter aircraft for the IAF, resulting in much confusion over single and twin engine jets. The MoD shared details of the SP model with the industry last week.
The Government has expressed its intention to engage six Indian private sector companies in each segment.
The major factors to rule on in this shortlisting is the Transfer of Technology (ToT), the extent of ToT, the extent of indigenous content proposed, and future R&D in India.