Blacklisted firms to be re-examined as Defence Minister unveils new guidelines

Published: 23rd November 2016 03:48 AM  |   Last Updated: 23rd November 2016 03:48 AM   |  A+A-


Defence Minister Manohar Parrikar. | PTI

By Express News Service

NEW DELHI: After year-long deliberations, the Ministry of Defence has finally unveiled the ‘guidelines for penalties in business dealings with entities’. The new guidelines appear to be more liberal than norms followed by the previous UPA government.

Though the ministry said it has simplified rules for blacklisting, it has not yet commented on  the future of four foreign companies that were barred from doing business in India for 10 years by former defence minister A K Antony. The blacklisted companies include Singapore Technologies, Israeli Military Industries, Germany’s Rheinmetall Air Defence and Corporation Defence of Russia for their alleged involvement in a multi-crore ordnance factory scam. These companies have already gone to court against the Centre’s decision.

Defence Minister Manohar Parrikar 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.

The review will include about a dozen firms that came under blanket blacklisting in the previous regime, a move the forces were unhappy about as it proved detrimental to their modernisation plans.

“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 said on the sidelines of an event in the national capital.

According to the new rules, India can do business with banned companies if there is no available alternative in the market. For example, due to a ban on key Israeli defence firms, the production line at the newly set-up Nalanda ordnance factory could not take off. But now, this will be allowed after approval from the highest authority in the service, not below the rank of vice-chief of concerned service.

Parrikar has been maintaining that national security should not be compromised due to a blanket ban on erring defence firms.

The new policy also states that banning of business dealings may be ordered only if a company accepts its misconduct, the CBI files a chargesheet against it or a court or tribunal finds it guilty.

But the fresh guidelines also make it clear that the ban period will not be less than five years in case of violations of integrity pact unlike the blanket ban of 10 years during the previous government. But the new policy does not mention the maximum ban period. And the company against which ban was imposed, will be allowed to take part in new tenders for spares, upgrades and maintenance for weapon systems supplied earlier “if the equipment which is the object of the contract is a propriety item and there are no available alternate sources of supply”.

It is notable that multiple ongoing projects of the Navy and IAF were hit due to a blanket ban on business dealings with such companies.

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