after rafale verdict, MoD breathes easy on big private sector participation plans
Sunday, December 16, 2018
Navy Air Force
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The controversy over the Rafale deal had cast a shadow on the upcoming selection of four Indian private players for major contracts worth billions, ranging from a new fighter jet, naval helicopters, diesel electric submarines and a future main battle tank
by Manu Pubby
The court’s observations that the Rafale deal fell in the category of “defence procurement which should be subject to a different degree and depth of judicial review” and that “broadly, the processes have been followed”, will give the ministry elbow room to move on with its strategic partnerships program.
An adverse verdict on the selection process would have created tremendous pressure on decision-making process to down select private sector players for the contracts, given that companies like Reliance Defence, the Adani Group, L&T and TATA are among main contenders.
The defence ministry has been stepping gingerly on the strategic partnerships program because of the minimum financial and technical criteria that needs to be set for private sector players to qualify and the process to be followed to ensure adequate indigenisation.
The private sector is closely watching the next step, particularly the financial gates that would determine who all can even qualify for the big projects. As ET had reported, Adani Defence has acquired Bangalore based Alpha Design, which it hopes will give the company an edge on the technical requirements in particular for the naval utility helicopters contest Decision-makers are conscious that corporates have been lobbying hard to ensure that the selections guidelines are as broad as possible.
Though the strategic partnerships project was cleared in 2016, the defence ministry has not been able to decisively move ahead despite sending out request for information for at least three of the four projects under consideration. The expectation now is that at least the naval helicopter contest could move to the next stage when the ministry will invite expression of interest from Indian private players and foreign vendors in the next couple of months. Intense discussions have taken place within the ministry and teams have been inspecting prospective Indian companies to gauge their technical expertise for the project. The fighter jet contest — to manufacture a new series of combat aircraft in India to make up for the reduced number of Rafales bought — is also expected to move ahead shortly with consultations with foreign vendors in the final stage.