Indian Defence companies may enter multiple projects under strategic partnership policy

There could be a major change in the strategic partnership policy in defence procurement procedure to allow an Indian private entity to bid and win more than one contract for developing and manufacturing big military equipment, according to an industry insider. A senior government official, however, said that the matter was still under deliberation and has not been finalised. “A recommendation has been taken, but not yet included in the strategic partnership policy,” the official said.

The matter was discussed at a meeting last month between defence ministry’s director-general (Acquisition), senior officials, industry associations and individual companies such as L&T, Tata, Reliance, Bharat Forge, Mahindra and Punj Lloyd. The Dhirendra Singh Committee and the subsequent Aatre Committee had placed restrictions in strategic partnership model by recommending that only one strategic Indian private entity be selected to manufacture in one military segment.

The strategic partnership chapter in the latest defence procurement procedure, however, didn’t say anything on the issue. The industry insider said that after the chapter was issued, the defence ministry received clarifications and suggestions from industry associations and private companies and it decided to clear all doubts at one go and held the meeting with industry associations and companies.

“After the Dhirendra Singh and Aatre committees recommended a restriction of having only one group per segment, the industry wanted a clarification on whether the restriction remained. At the meeting, MoD officials said that there were no restrictions on a qualifying Indian company bidding for as many programmes and winning them,” the top industry insider said.

For example helicopters is a segment and programmes could be multi-role and utility helicopters for the Navy. Requests for information have already been issued for two helicopter programmes, indicating that the defence ministry will stick to programmes, not segments, according to the official.

The earlier understanding in the private industry was that a company can bid for several segments, but can be strategic partner in one segment. Now, the understanding is that a company can bid for becoming a strategic partner for different programmes of a segment and win all if capable, according to the industry insider .

By: ET

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