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The Big Picture- Defence Blacklisting Policy: Will Procurement Improve?



The Big Picture- Defence Blacklisting Policy: Will Procurement Improve? 


For many decades now, there has hardly been any defence procurement in India that has not faced controversy. The defence contractors including foreign companies have come under suspicion or allegations of shady dealings leading to their blacklisting affecting the defence preparedness of Indian military. In light of the recent incidents like Augusta Westland Chopper scam, Scorpene Data leaks, the Defence Ministry has come forward with a new draft for defence blacklisting.


Some of the provisions of the new draft for Defence Blacklisting Policy as mentioned by the Defence Minister Mr. Manohar Parrikar are as follows:


  1. The companies will face action only when there is a clear or enough evidence of criminality or corruption. Companies in future are not supposed to be blacklisted indiscriminately unless the charges against them are of criminal nature or they have committed a serious crime like stealing documents or paying a bribe.
  1. There will be no clause for automatic blacklisting. The punishment for corruption and wrongdoing by a defence manufacturer will be applied in a graded manner. After receipt of an initial complaint, the procurement process will be put on hold for a few weeks for a basic enquiry into the merits of the charge. If the charges are substantial and are found correct, it will lead to a suspension of the firm pending a full investigation hence doing away with the blanket rule of blacklisting companies under previous governments. 
  2. At present, a company can be barred from contracting with the government as soon as suspicion of wrongdoing emerges, and it remains blacklisted throughout the investigation. If the firm is prosecuted and convicted, it can be debarred for up to 10 years. 
  3. The government will not stop from buying a product even if any equipment or software is embedded into it which has been manufactured by a blacklisted company.
  4. Aninternal audit to rule out any security breach is also being taken into consideration. 
  5. The fact that allegations against a defence supplier are being examined by the CBI will not become a reason for blacklistingas CBI might take 10 years to examine and finalize a case and may not find the case strong enough for conviction. 
  6. There are various pre blacklisting stages mentioned either in the contract signed with the company or an integrity pact. The violation of the integrity pact could invoke a pre fixed penalty but will not lead to blacklisting of company.


What needs to be the course of action? 

  1. As far as procurement is concerned, it should not be stopped after the field trials are conducted for the weapons. Officials who are found guilty of corruption can be punished separately. Our country should not be penalized for a few bad men. Further, it also hampers the development, modernization of defence and harms operational readiness.Manufacturers investing through FDI in defence tend to get cut off and negotiations come to a halt in terms of business.


  1. Blacklisting of companies even if required should not be done in an impulsive manner without an enquiry. It can be done for a short while but procurement should not be stopped. All these controversies tend to begin beyond the boundaries of armed forces headquarters in terms of field trials and everything else. Operational requirements are laid down by the special branches of all three services. They are passed on to the post structure development branch which does rest of the process in terms of induction.


  1. Later, at political level when these dealings pass through various layers of decision making, these problems begin. Since a lot of money along with political and non-political interest is involved, our politicians tend to take cognizance of the matter only when such issues are over emphasized by the media.In case of Augusta Westland deal, no FIRs have been done; there is no charge sheet, investigation, enquiries or case. Just because of an allegation, an excellent deal has been cancelled. Till the enquiry is incomplete, the procurement process should go on. Action can be taken after the enquiry is over.


  1. The Government of India being a single buyer of defence equipments for the country, it needs to create an ecosystem where the incentives for corruption and criminal activities are reduced which has not been done yet.There are gaps in our political system which gives way to corruption.


At present, if the new policy is applied to the Scorpene Deal in an objective manner, it will not be delayed. As far as the draft is concerned, it has made it clear that acquisition and investigation should go on together and this is what is rightly needed at present. What is needed is to strike a balance between moralities and ensure preparedness at place as well.