PSUs lose defence privilege

[Sashan]

OUR SPECIAL CORRESPONDENT
New Delhi, June 22: Defence minister A.K. Antony today withdrew the privilege of public sector undertakings to supply equipment to the armed forces.

This effectively means that the defence public sector undertakings (DPSUs) will have to compete with the private sector on a level playing field. But the government is apprehensive of the domestic private sector’s ability to produce equipment of adequate quantity and quality for the armed forces. More than 70 per cent of the weapons and platforms for the armed forces are imported.

The defence minister’s decision comes in the background of a row over defence public sector BEML’s privileged claim to supply Czech-origin Tatra trucks to the army over two decades, an issue flagged by the former army chief, General (retired) V.K. Singh.

Antony told a meeting of the Defence Acquisitions Council (DAC) that the DPSUs cannot be given contracts through nomination “unless the equipment is operationally very important”.

There are eight DPSUs. Although BEML claimed that it was making the trucks, more than 7,000 of which are in the service of the armed forces, inquiries have disclosed that the PSU was doing little more than assembling kits and selling them to the army at a marked-up price.

The defence ministry today also cleared the purchase of a networked command and control system for the Indian Air Force, short-range missiles for the army and onboard guns for the navy in decisions that mark the beginning of an arms purchase spree.

The DAC, chaired by Antony, was meeting for the third time in two months after V.K. Singh pointed to critical shortages in the arsenal in a letter to the Prime Minister in March. Friday’s DAC meeting was the first attended by the new army chief, General Bikram Singh.

Ministry sources said the council approved the purchase of three regiments of Quick Reaction Surface to Air Missiles (QR-SAMs), a self-defence system against aerial attacks for the army, for an unspecified price.

The command and control system for the air force, which will ride a countrywide optic fibre network connecting all assets, is estimated to cost Rs 7,000 crore.

The new purchases that have been approved include 14 Dornier transport and surveillance aircraft, to be made by the public sector Hindustan Aeronautics Limited for the air force. The council also cleared a Rs 1,500-crore purchase of 116 30mm naval surface guns, to be installed on navy and coast guard ships.


PSUs lose defence privilege


Long due but finally a good news.

 

[Basanti]

They should also proclaim a zero assistance policy to public companies. Otherwise idiots in BEML will slack away and steal money from the government the same way Air India does. It is either perform or die. Nobody should go for their rescue.

 

[keerthan]

atleast now i think defense deals will be done in right way not by stupidly giving away deals to PSU

 

[KRAIT]

Who says words don't have power. A letter is changing Indian defense sector.....

 

[ramu]

Stung by Tatra truck deal, government overhauls rules for suppliers

New Delhi: Defence Minister AK Antony has told the three services - the Army, the Navy and the Air Force - that Defence Public Sector Units (PSUs) can no longer enjoy the privilege of being the preferred suppliers for the forces.

The directive was issued by Mr Antony while chairing a meeting of the Defence Acquisition Council (DAC), the Apex body within the Ministry of Defence (MoD), which advices the government on how much and what weapons and equipment to be purchased. Withdrawing the privilege of the PSUs, Mr Antony said that forces cannot and should not nominate PSUs as suppliers for equipment. The minister said that equipment should be purchased through an open tendering that is "transparent and competitive".

The directive comes days after the Central Bureau of Investigation (CBI) wrote to Mr Antony asking him to remove Bharat Earth Movers Limited (BEML) chief VRS Natarajan. The BEML chief is being probed in the Tatra deal along with UK-based businessman Ravi Rishi. It is alleged that Mr Natarajan conspired with Ravi Rishi and sold sub-standard vehicles to the Army at inflated rates. The Indian Army has purchased about 7000 Tatra trucks over the last two decades. The former Chief of Army Staff VK Singh too had alleged that he was offered a bribe by a retired Army officer on behalf of Ravi Rishi to clear the procurement of Tatra trucks.

Senior MoD officials claimed Mr Antony told forces that unless equipment is of extreme operational "importance", acquiring them by through a Defence PSU should be "discouraged". The directive of the Defence Minister goes a long way to ensure a level playing field for the Indian private sector, who have, for long, complained about the lack of it. However, it is also a fact that Indian companies are at a very nascent stage.

Meanwhile, the DAC cleared rearming three Air Defence regiments with Quick Reaction Surface to Air Missiles (QRSAMs). The QRSAMs have dual use. They can be deployed along vital strategic installations like Nuclear Power Plants and Dams to protect them from incoming threats. In addition, during a war, the QRSAMs are mounted on mobile platforms to protect ground troops and advancing columns from in-coming threats. Each is expected to have between three to four batteries, adding up to about 16 launchers per regiment. The DAC also cleared the purchase of 14 additional Dornier aircrafts.

Stung by Tatra truck deal, government overhauls rules for suppliers

 

[third eye]

About time too, these white elephants need to compete evenly.

Gen VK Singh's points were valid , the army is getting short changed by these PSU's.

 

[Sergi]

Who says words don't have power. A letter is changing Indian defense sector.....

No. I credit it to the person who leaked the letter though his intentions where to hurt Mr. Sing's reputation but finally it turn out to be he has done the Best thing for India

 

[Rajaraja Chola]

I think the govt should look at Ashok leyland and Tata military trucks !!
This will increase competition and quality !!

 

[Abingdonboy]

Now this really is something, private players should see a real boost now. But to be fair this sort of regulations could only really occur now, now that Indian private players really are able to produce quality products of comparable, and in many cases, superior quality and utility to the armed forces.