The new set of guidelines are now part of the Defence Procurement Procedure (DPP), 2016 that was put out in public last week.
Highlights
- Government allows companies to hire 'agents' to front defence deals
- New guidelines also means more scrutiny for defence firms
- Government will also have veto power to reject or accept any agent
Foreign defence firms can now appoint 'agents' to market their products to the armed forces and the government but with strict oversight which includes opening up of company's books to scrutiny, besides not allowing any success bonus or penalty fees among other measures.
The government will also have the veto power to reject or accept, at any point of time, an agent proposed by the company.
The new set of guidelines are now part of the Defence Procurement Procedure (DPP), 2016 that was put out in public last week as the government works on ensuring transparency in defence deals.
While previous DPPs also had a window for foreign companies to hire agents, it is for the first time that a detailed set of guidelines has come out.
The previous mechanisms had failed to ensure transparency even though defence agents continued to play crucial roles in defence contracts.
In an interview to the Press Trust of India earlier, Defence Minister Manohar Parrikar had drawn a distinction between agents and middlemen, saying the government will not leave room for any "hanky- panky".
"Agents do not mean middlemen. There will be scope for a company to appoint an agent to represent it or to get over technical difficulties by paying him or her reasonable fees which will have to be mentioned upfront," Mr Parrikar had said.
As per the new guidelines, the vendor is required to disclose full details of any such person, party, firm or institution engaged by them for marketing of their equipment in India, either on a country specific basis or as a part of a global or regional arrangement.
These details should include the scope of work and responsibilities that have been entrusted with the said party in India. If there is non-involvement of any such party then the same also be communicated in the offers specifically.
The contract with the agent, under the new rules, will not be a conditional contract wherein payment made or penalty levied is based, directly or indirectly, on success or failure of the award of the contract.