India’s Blacklisting Policy Likely To Be Announced Next Week

The Indian Defense Ministry is likely to release the guidelines on blacklisting norms and strategic partnerships next week.

The Chapter 6, which deals with the appointment of "strategic partners" in the private sector had not be released with the Defense Procurement Procedure of 2016 until now. It governs the selection of private industries as the ministry's priority partners in manufacturing equipment like aircraft, warships, helicopters, submarines, tanks, etc, based on technology from foreign vendors.

Unlike the previous policy of a blanket ban on a Defence conglomerate followed by the previous UPA government, ban under the new policy will be product specific and company specific, NDTV reported quoting unnamed Defense Ministry official as saying Thursday.

"After the new policy comes in, we will not buy helicopters or have any business relationship with AugustaWestland - a subsidiary of the Finmeccanica (now Leonardo) that is suspected to paid bribes when India bought AW-101 helicopters. But India will be free to negotiate with other companies within the conglomerate for other platforms," NDTV reported.

In March this year, the Indian MoD decided to allow all the blacklisted companies to participate in the Defence Exposition held in Goa.

The move to allow blacklisted companies is most likely based on the decisions relating to blacklisting policies the government is working on. India is likely to propose alternative mechanisms to curb corruption instead of blacklisting defense manufacturers.

It is considering ‘negotiated resolution’ with the accused company similar to ‘deferred prosecution agreements’ (DPA) followed by UK and US.

The investigating authorities can negotiate with companies accused of wrongdoing to pay penalties and reparations. Criminal prosecution of the company in a particular case is suspended but criminal prosecution of individuals involved in corruption will continue.

The defense policy pursued by the previous government under former Defense Minister A K Anthony insisted on putting defense deals on hold if there were allegations of corruption and the firm concerned automatically blacklisted.

Currently, there are fifteen companies including six foreign firms that are blacklisted by MoD while 23 other companies are under scrutiny for allegations of corruption.