Defence Minister AK Antony has told the three services - the Army, the Navy and the Air Force - that Defence Public Sector Units (PSUs) can no longer enjoy the privilege of being the preferred suppliers for the forces.
The directive was issued by Mr Antony while chairing a meeting of the Defence Acquisition Council (DAC), the Apex body within the Ministry of Defence (MoD), which advises the government on how much and what weapons and equipment to be purchased. Withdrawing the privilege of the PSUs, Mr Antony said that forces cannot and should not nominate PSUs as suppliers for equipment. The minister said that equipment should be purchased through an open tendering that is "transparent and competitive".
The directive comes days after the Central Bureau of Investigation (CBI) wrote to Mr Antony asking him to remove Bharat Earth Movers Limited (BEML) chief VRS Natarajan. The BEML chief is being probed in the Tatra deal along with UK-based businessman Ravi Rishi. It is alleged that Mr Natarajan conspired with Ravi Rishi and sold sub-standard vehicles to the Army at inflated rates. The Indian Army has purchased about 7000 Tatra trucks over the last two decades. The former Chief of Army Staff VK Singh too had alleged that he was offered a bribe by a retired Army officer on behalf of Ravi Rishi to clear the procurement of Tatra trucks.
Senior MoD officials claimed Mr Antony told forces that unless equipment is of extreme operational "importance", acquiring them by through a Defence PSU should be "discouraged". The directive of the Defence Minister goes a long way to ensure a level playing field for the Indian private sector, who have, for long, complained about the lack of it. However, it is also a fact that Indian companies are at a very nascent stage.
Meanwhile, the DAC cleared rearming three Air Defence regiments with Quick Reaction Surface to Air Missiles (QRSAMs). The QRSAMs have dual use. They can be deployed along vital strategic installations like Nuclear Power Plants and Dams to protect them from incoming threats. In addition, during a war, the QRSAMs are mounted on mobile platforms to protect ground troops and advancing columns from in-coming threats. Each is expected to have between three to four batteries, adding up to about 16 launchers per regiment. The DAC also cleared the purchase of 14 additional Dornier aircrafts.