NEW DELHI — India's Defense Acquisition Council (DAC) on Monday approved a new policy regarding the blacklisting of defense companies charged with corruption. The agency also approved $12.61 billion worth of new homemade defense projects.
The formal blacklisting policy guideline will be published on the website of the Ministry of Defence (MoD) in the next few days. DAC falls under the purview of Defence Minister Manohar Parrikar.
Companies alleged to have been involved in corrupt practices or illegally influenced defense contracts will be severely punished, and the blacklisting of a company will comprise several levels of punishment and embargos, said a senior MoD official.
The new policy permits other group companies to participate in defense projects, but the group company of a defense conglomerate found to be involved in corrupt practices will be barred from doing business for a particular period of time for the same program.
The new policy bans specific defense products supplied by the company involved in corruption practices, but it also prevents blanket blacklisting of a defense conglomerate, noted the MoD official, adding that " heavy penalties will be imposed and even persons involved in corruption will be debarred."
India canceled a $554 million contract in 2014 for the purchase of 12 VVIP helicopters from AgustaWestland following allegations of corruption. Defense conglomerate Leonardo Leronardo-Finmeccanica of Italy and its subsidiaries were are currently prohibited from participating in future defense projects in India.
Currently, Singapore Technologies Kinetics, Israel Military Industries (now known as IMI Systems), Germany-based Rheinmetall Air Defence, and Corporation Defence of Russia have been debarred from doing business in India for the next 10 years in response to corruption allegations.
The new defense procurement projects approved by DAC and valued at about $12.61 billion will be based in India and inducted in the next eight to 10 years.
Under the approved projects, 83 Tejas light combat aircraft Mark 1A, costing about $7.69 billion, and 15 light combat helicopters, at $447.84 million, will be manufactured by state-owned Hindustan Aeronautics Limited.
State-owned Ordnance Factory Board will license produce Russia-made 464 T-90 main battle tanks at a cost of $206.89 million.
Additionally, domestic defense companies will be asked to build 598 mini-UAVs at a cost of $16.92 million.
DAC also approved the new domestic tender to procure six regiments of homemade Pinaka multi-barrel rocket launcher systems at a cost of $225.12 million to be manufactured by Indian defense companies.