The Hindu : Defence purchase norms exacting

Online edition of India's National Newspaper
Sunday, Mar 17, 2002

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National

Defence purchase norms exacting
By Our Special Correspondent

NEW DELHI, MARCH 16. The Government is in a bind over its move to allow agents in foreign defence purchases.

The guidelines are seen as too exacting by the defence industry, leading to several enquiries but no formal application so far. On the other hand, the Government is not too keen on diluting the requirements because of the political uproar that will invariably follow. As it is, the Opposition is not too happy over the lifting of the ban, terming it a move to ``certify commission agents'' in the sensitive sector.

The Government believes that authorised representatives would facilitate the availability of information, technical details and literature, trial evaluation and several other formalities associated with the purchase of foreign defence hardware.

At the same time, the Defence Ministry has indicated its reluctance to relax the norms by pointing out that it has not faced any problem in acquiring equipment so far because a detailed procurement procedure is already in place. This procedure is being successfully implemented since 1992 and would not be dependent on the appointment of defence agents.

At the same time, the Ministry is aware of the exacting details laid down in the guidelines issued almost five months ago. Aware that the existing system has been completely compromised, it is however loath to relax the norms due to charges it will invariably invite from the Opposition.

But the industry is unwilling to meet all the details sought by the Government before the Defence Ministry issues a formal accreditation letter. Although it is aware that transacting business through shadowy agents is costlier and patently illegal, several international companies still prefer this route rather than wade through the wealth of details sought by the South Block.

For instance, the amount of commission to the agent will be determined by the Ministry of Defence.

Details about the commission must be reported to the Enforcement Directorate which would send copies to the RBI, Income Tax and Customs & Excise departments. The companies will also have to give details about the previous standing of their agents such as whether they are retired defence officers, their previous professional background and details about the nature of business undertaken by the authorised representative and agent.

The agents will have to submit several documents to the Defence Ministry including attested photocopies of all agreements with their principals. They have also been told to furnish a legally effective undertaking which, if violated, shall bind them to specified penalties. A foreign supplier can only make declared payments in rupees.

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