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Govt won't allow middlemen in arms deals

Govt won't allow middlemen in arms deals

Pranab Mukherjee has said that no middlemen would be allowed in defence deals running into billions of dollars.

New Delhi: As the country gears up to negotiate mega defence deals running into billions of dollars, Defence Minister Pranab Mukherjee on Tuesday declared that no middlemen would be allowed in such deals.

"There is a ban in force on middlemen," Mukherjee said while elaborating that as per the norms laid out by the new arms procurement policy, all weapon sellers would have to sign integrity pacts, binding them not to use middlemen in deals.

This is part of drive not to allow men of doubtful character to roam around South Block, Defence Secretary Shekar Dutt said.

Though middlemen are banned in weapons deals, Mukherjee said the ban would not be applicable to duly registered arms agents.

Speaking at a Federation of Indian Chambers of Commerce and Industry (FICCI) sponsored seminar on 'Public-Private partnership in Defence procurements,' in Delhi, the Minister said the Government would soon announce new procedures to make it easier and mandatory for all arms agents to register themselves with not only the Defence Ministry, but also Reserve Bank.

Though registration of arms agents had been legalised by the erstwhile NDA regime, Mukherjee said there were hardly any takers.

"Only a handful of firms had sought registration," he said pointing out that the UPA Government was in process of streamlining procedures, so that all arms agents got registered.

On the occasion, the Defence Ministry stoutly defended the Defence Research and Development Organisation (DRDO) urging the nation to have patience and faith in country's defence scientists.

"In indigenous arms platforms projects, you can't expect made-to-order systems. Development of critical technologies for missiles, aircraft and tanks have a gestation period", he said.

Mukherjee also said that the time and costs overuns in such projects need to be taken into the stride.

"Indigenous projects in critical systems have to be kept alive," the Defence Minister said pointing out that India had a bitter experience in dependance on outside sources for defence equipments.


"The availability of high-end technology is made difficult by technology-denial regimes and Nations that rely on imported weapons systems are vulnerable to sudden cessation of supplies during war," he said.

Mukherjee, emphasising that the country's goal should be to strive for maximum self-sufficiency, said, "India has been in the past also been adversely impacted by such policies of supplier nations."

Pointing out to the audience comprising Industry captains and Chief Executive Officers that modernisation drive in the armed forces was in full swing, the Minister said time had come for private sector to play a more meaningful role in the country's defence.

He said capital expenditure in defence had been increased to Rs 37,458 crore in 2006-07 from Rs 12,384 crore in 2000-01 and this represented a boost of almost 202 per cent.

"As the defence expenditure is growing our earnest desire is to see that the Indian industry and the society benefits from the spin-offs such a growth would engender," he said.

The Minister also outlined the new steps and initiatives taken by the Government to allow the Indian industry a level playing field.

He said under the new Low Technology Mature Systems categorised as "buy Indian" would have a minimum of 50 per cent indigenious content that would provide the local industry opportunities to even use existing level of technology to achieve the mandatory 50 per cent indegenious content.

Similarly, he said the category of 'High technology complex systems" would also provide the domestic industry to take its rightful share by private-public participation.

first published:October 24, 2006, 16:06 IST