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Force policy tweak to help Indian companies

New Delhi, Oct. 30: The armed forces are set to declassify their shopping list for Indian companies that can take up research and development of military products, modernise equipment and enter into joint ventures with foreign firms to meet their demands, after changes to the Defence Procurement Policy (DPP) announced here today.

This is good news for Indian firms that have started or are keen to start new lines of business in military products. The Tatas, Mahindras, Larsen and Toubro and several small and medium enterprises are likely to benefit.

Defence ministry officials estimate that purchases can top $30 billion over the next five years. They are trying to fashion an offsets (re-investment) policy that will plough back 30 to 40 per cent of the value into domestic industry.

“A major impediment in the growth of the defence industry in the country has been lack of information with the domestic industry on defence requirements,” a ministry statement said.

The information famine did not allow the companies to plan their research and development of military technology and collaborations with foreign companies. After the amendment to DPP 08, “a public version of the long-term perspective plan” of the armed forces which will outline the technological capabilities that they want to acquire over a 15-year period will be made available to Indian companies. The version will also be put up on the defence ministry website.

Representatives of the companies and industry associations will be asked to give presentations and consult with the Defence Acquisitions Council before procurements are decided.

In other amendments to the policy, the ministry said it would give more powers to independent monitors in consultation with the Central Vigilance Commission to oversee “integrity pacts”. These require the government and vendors for all purchases over Rs 100 crore to commit there will be no bribes.

The independent monitors will now have powers to scrutinise complaints and examine office records in response to complaints by the buyer.

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