Business / Industry Sectors
Indian govt may relax norms for authorized defence agents
06/10/2014
The Ministry of Defense is soon going to encourage registration of legalized agents with the new policy starting in November - December this year.

After implementing nuanced blacklisting norms to replace the earlier indiscriminate ones, the Modi government is now working to overhaul the policy on the hiring of defence agents by foreign armament companies. 

 

 

Sources say the defence ministry has already held one round of top-level discussions on the policy for "authorised Indian representatives or agents" and the role they can play in facilitating and smoothening arms deals in a legitimate manner. 

 

 

Though the policy is yet to take a final concrete shape, the "dominant view" now emerging in the MoD is that it should junk its regulatory role over the agents imposed through stringent guidelines issued in 2001. "The regulatory business has met with poor success, and even proved counter-productive," said a source.

 

 

India is the world's largest arms importer, having spent Rs 83,458 crore in just the last three years in acquiring weapons from the US, Russia, France, Israel and others. Overall, India has inked arms deals worth well over $60 billion since the 1999 Kargil conflict. But there are just a handful of legalised defence agents on the rolls of MoD. 

 

 

Conversely, hordes of shady middlemen -- sometimes in the garb of "consultants" -- lurk in the corridors of power to grease the official machinery and swing deals with hefty kickbacks to politicians, bureaucrats and military officers despite all the anti-graft provisions and "integrity pacts" in place. 

 

The MoD hopes to encourage the registration of a greater number of legalised agents with the new policy, which will probably be ready by November-December. As opposed to the wheeling and dealing of middlemen, these agents can assist foreign armament companies in replying to arms tenders, trial evaluation of systems, price negotiations, enhancing the quality of after-sales service and in resolving performance and warranty issues. 

"The thought process is that armament companies should be free to choose anyone they want to act as their agents, provided they are not blacklisted. It should also be left to the company to decide how much commission it wants to pay the agent," said the source. 

"MoD will only set some ground rules. For instance, like whether or not agents can sit in CNC (contract negotiation committee) meetings. The policy, of course, will not eliminate middlemen...they will continue to be tracked and prosecuted," he added. 

Interestingly, the NDA government in 2001 had lifted the blanket ban on agents, which had been in force since 1987 after the infamous Bofors howitzer and HDW submarine scandals. But this bid to inject some transparency did not really work since the stringent norms laid down for agents were considered unrealistic, with the government even declaring it would determine the scale of commission to be paid to them. Consequently, almost no one came forward to be registered as an agent. 

 

Source: Times of India

 

 

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