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Expert panel wants CAG to pre-audit defence deals

By Nitin A Gokhale
July 24, 2015 10:18 IST
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An expert committee has recommended to Defence Minister Manohar Parrikar that defence purchases need not be blocked even if bribery charges emerge. Nitin A Gokhale reports for

Defence Minister Manohar Parrikar will take a final call on the recommendations of an expert panel to simplify defence acquisition and procurement under a new policy that could be notified in the next fortnight.

Many other recommendations on shrinking the timelines for procurement, sources say, besides the policy on blacklisting of companies involved in wrongdoing and appointment of authorised agents by defence companies will form part of the final report.

Headed by former Union home secretary Dhirendra Kumar, the committee wants the Comptroller and Auditor General to pre-audit deals rather than raise objections later. The committee submitted its report to Parrikar in New Delhi on Thursday, July 23.

It has highlighted the strategic imperative to leverage diverse capability and capacity of Indian private industry, including medium, small and micro enterprises, to create a vibrant defence industrial base.

'Industry needs to be given adequate actionable inputs on the services requirements so that industry can evaluate their own capability, assess the gaps and make investments decisions in case they choose to participate in the acquisition scheme,' the committee has said.

In addition, it requires flexibility in obtaining advice of consultants and other professional bodies.

'This is best accomplished by organisations given a measure of autonomy and flexibility to devise their own procedures for activities, which would enable them to better perform their allocated functions under the Defence Procurement Procedure. Both the Department of Atomic Energy and Space have benefited immensely from such dispensations...'

'What is required is to strengthen the organisation by induction of experts in the fields referred to above and to give them tenures longer than now in vogue, and to many at support levels, full time careers within the organisation. The structure could either be an attached office or autonomous entity,' the committee is learnt to have recommended.

The report, submitted to the ministry of defence, also lays down the level of indigenisation and the method of calculating the local content in each defence equipment.

Globally, India is the largest buyer of weapons and military equipment, accounting for some 15 per cent of all such international imports, according to a report by the Sweden-based think-tank Stockholm International Peace Research Institute in March.

The committee has interacted with the defence minister, the defence secretary, the vice chiefs of the three services, officials in the MoD's finance wing, top industry people, representatives of foreign companies in India and even officials of long-term suppliers such as Russia.

After taking suggestions, the committee in its report says the misdeeds of an entity or its employees should not be visited on the equipment or system. In other words, it is a suggestion that there is no need to block the supply of equipment in case some bribery charge emerges.

The panel also says that minimum indigenous content threshold for categories 'Buy Indian' and 'Buy and make Indian' should be revised to 40% and 60% respectively.

A committee should be empowered to give specific recommendations for lower or higher indigenous content. A lower threshold could be considered by the Defence Acquisition Council, based on technology and its availability.

Image: Prime Minister Narendra Modi and Defence Minister Manohar Parrikar at the inauguration of the Aero India 2015 Air Show.

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