MASSIVE REVAMP OF MINISTRY OF DEFENCE (MOI) NEW PURCHASE PROCEDURE ON ANVIL
[Move to open up field for Local Private Sector]
The Government is set to remove software and consultancy services out of defence offsets in the wake of Italian investigators finding that middlemen involved in
the VVIP helicopter scandal routed kickbacks into India through a phony software contract.
• First opportunity in all defence contracts to go to Indian companies, foreign suppliers last option. Currently, 70% of purchases come from foreign firms.
• Indian sellers will include private companies that from a JV or have production arrangement with a foreign firm. Minimun 50% indigenous content.
• Software services, consultancies to be kept out of offsets-products and services through which the seller ploughs back 30% of contract value into the country.
• Defence offsets will now largely focus on engineering services which are quantifable.
• Move comes after Agusta Westland was found to have routed bribe money by sourcing phony software from IDS Infotech in the name of software outsourcing.
the VVIP helicopter scandal routed kickbacks into India through a phony software contract.
• First opportunity in all defence contracts to go to Indian companies, foreign suppliers last option. Currently, 70% of purchases come from foreign firms.
• Indian sellers will include private companies that from a JV or have production arrangement with a foreign firm. Minimun 50% indigenous content.
• Software services, consultancies to be kept out of offsets-products and services through which the seller ploughs back 30% of contract value into the country.
• Defence offsets will now largely focus on engineering services which are quantifable.
• Move comes after Agusta Westland was found to have routed bribe money by sourcing phony software from IDS Infotech in the name of software outsourcing.
Lookout for fake software exports
Following revelations on the routing of alleged kickbacks in the VVIP chopper deal through software outsourcing, the Directorate of Revenue Intelligence (DRI) is keeping a watch on software exports and remittances received. Software exports, worth $ 59 billion, is a grey area since the actual value of a software cannot be ascertained. The RBI too is looking into the sector as data showing software exports worth Z 1.51 lakh crore do not have matching bank transactions of money received.
The government is also finalizing a massive overhaul of defence procurement, procedure, providing first opportunity in all contracts to Indian companies, including those from the private sector, while placing procurement from foreign suppliers as the last option.
The decision should open up massive contracts for the Indian private sector, and would also challenge the virtual monopoly enjoyed by foreign vendors and Indian defence public sector units in defence contracts.
Presently, almost 70% of ndian defence purchases are from foreign companies, while most of the remaining is procured from Indian public sector units and ordnance factories. Highly placed sources told TOI that the Ministry of Defence (MoD) has decided to remove software services and most consultancies out of products and services that can be listed as offsets. Under the Defence procurement Procedure, in any purchase over' 300 crore from a foreign company 30% of the contract value has to be ploughed back into India through offsets. Offsets are meant to improve indigenous manufacturing, engineering and technological base as well as to route investments into domestic industry. Offsets are also adopted in foreign procurement in other sectors too.
The government is also finalizing a massive overhaul of defence procurement, procedure, providing first opportunity in all contracts to Indian companies, including those from the private sector, while placing procurement from foreign suppliers as the last option.
The decision should open up massive contracts for the Indian private sector, and would also challenge the virtual monopoly enjoyed by foreign vendors and Indian defence public sector units in defence contracts.
Presently, almost 70% of ndian defence purchases are from foreign companies, while most of the remaining is procured from Indian public sector units and ordnance factories. Highly placed sources told TOI that the Ministry of Defence (MoD) has decided to remove software services and most consultancies out of products and services that can be listed as offsets. Under the Defence procurement Procedure, in any purchase over' 300 crore from a foreign company 30% of the contract value has to be ploughed back into India through offsets. Offsets are meant to improve indigenous manufacturing, engineering and technological base as well as to route investments into domestic industry. Offsets are also adopted in foreign procurement in other sectors too.
0 comments:
Post a Comment