INFRASTRUCTURE & DEFENCE ENTREPRENEURS’ ASSOCIATION
KULDEEP KUMAR KOHLI
PRESIDENT
PRESIDENT
15.4.2015
Maj. Gen. Bhuwan Chandra
Khanduri, AVSM (Retd),
Member
of Parliament & Chairman,
Standing
Committee on Defence,
7
K Kamraj Lane,
New
Delhi – 110011
REQUEST FOR A PRESENTATION BEFORE
THE STANDING COMMITTEE ON DEFENCE ON IMPORTANT ISSUES CONCERNING “MAKE
PROGRAMME” OF THE MINISTRY OF DEFENCE
Dear
Sir,
We
shall be extremely grateful for an opportunity to give a presentation to the
Respected Chairman and the Members of the Standing Committee on Defence during the
next meeting on some of the major issues of concern to the Industry / MSMEs.
Infrastructure
and Defence Entrepreneurs Association (IDEA)
is an association of Indian businesses which works closely with the Government
on policy issues, interfacing aspiration of the industry with the decision
makers and in the process enhancing efficiency in speedy resolution of the
industry’s issues. We are associated
with more than 1500 industries in the country.
“Transparent and swift decisions" have always been the speciality of your
Government and your Government has been kind in making announcements on the
policy reforms to be brought into the Defence sector for providing necessary
boost to the ‘MAKE” programme of the Ministry of Defence, to encourage the growth of private Defence
industry in India.
There is no second thought to the fact that the
Ministry of Defence is looking to increase “MAKE” opportunities. We have
also been given to understand that the MoD is expected to finalize the “MAKE”
category of the Defence procurement procedure very shortly to make the option
more attractive to the domestic industry.
We are also aware of the fact that the focus of the
Ministry of Defence is to ensure participation of more indigenous manufacturers
in the Defence industry of India and hence it is your endeavour to dilute the
current policy a little and make it easier to understand and more attractive
for Indian vendors who are investing in the high risk areas.
We
have been given few representations by the members of the Defence industry in
the country requesting us to pursue for the following changes in the “MAKE”
Defence Procurement Policy
1.
DILUTING THE CONDITION OF MINIMUM CRISIL/ICRA CREDIT
RATING FROM “A” TO “B++”
2.
REMOVING THE NETWORTH CONDITION/ REDUCING THE
“POSITIVE NET WORTH” OF 5% OF THE PROJECT VALUE WITH A MAXIMUM NETWORTH NOT
EXCEEDING RS. 750 CRORES.
One of the major issues
of concern to the industry is the company credit rating equivalent to “A”. This needs to be diluted to “B ++”.
Similarly, the
“POSITIVE NET WORTH” criteria of 5% of the project value with a maximum
“NET WORTH” not exceeding RS. 1250 Crores need to be reduced to maximum of Rs.
750 CRORES.
Sir, the earlier policy of the Ministry of Defence required the following
three conditions:
- Asset base of Rs 100 Crore
- Turnover of Rs 1000 Crore for last three years
- CRISIL/ ICRA rating of “A”
We are unable to understand why; it is now proposed to make the
requirement of net worth to 5 % of the project cost with a maximum “Net Worth”
of Rs 1250 Crore, without specifying any reason. If at all it is necessary to impose the condition of the maximum “Net
Worth”, it should be limited to Rs. 750 Crores.
If the companies could bid for large ‘Make’ projects like BMS and TCS
without the “Net Worth” criteria in earlier conditions, we do not think there
is any need to add the same now, as this would not serve any national interest.
3.
TIMELY SHARING OF GSQR AND
4.
TIMELY SHARING OF QUANTITIES REQUIRED BY MINISTRY OF
DEFENCE
It may
be appreciated that in the absence of the following, the industry is
handicapped for time to scout for foreign tie-ups or to establish the necessary
manufacturing facilities:
- Firm requirements of the armed forces made known to the private sector sufficiently in advance and
- Timely sharing of GSQR, either
during formulation in consultation with the industry or immediately after
the formulation.
We
shall be extremely grateful for your personal indulgence in getting the above
suggestions implemented on priority which would help the defence industry in
ensuring success to the “MAKE”
programme of the Ministry of Defence.
We do appreciate that the matters
concerning security have to be given overwhelming consideration while
formulating macro policies, it devolves on the government to strike a fine
balance between aspirations of the industry and security concerns of the
country.
Sir, “The Technology Perspective and Capability
Roadmap” (TPCR) does provide necessary guidance to the Indian defence
industry to an extent but the same in
the present shape is very broad based and generic in nature.
- THE
FLEXIBILITY TO ADD AND OR AMEND THE INDIAN OFFSET PARTNER (IOP)
- THE
FLEXIBILITY TO WORK THE PACKAGE WITH RETROSPECTIVE EFFECT I.E. APPLICATION
TO ALL CONTRACTS INCLUDING PREVIOUS UNDER EXECUTION
We
shall be extremely grateful if the Offset” Policy of 2012 is amended to
accommodate the OEM on the following issues.
- OEM
is permitted to choose his IOP and the work package as he so
desires. This would give the OEM all the flexibility.
- The
amendment so permitted to be effective on all contracts under execution
which means it would have retrospective application and will be governed
under a amended 2012 policy/procedure.
7. KEEPING THE NET WORTH CRITERIA OPEN IN
THE MAIN POLICY
Sir the
proposed policy incorporates that in case the “Net Worth” criteria is
considered too high or too low for the purposes of adequate EOI responses, the
Feasibility Study will bring out an alternate specific recommendations for
consideration of the DAC/DPB/SCAPCHC at the time of AON
This may not be a good option as
keeping the criteria open in the main policy is not considered to be a
transparent policy and would, therefore, be vulnerable to last minute
influences to serve individual goals.
- NO NET WORTH CRITERIA FOR SMES
This definitely is a very
Welcome move.
We shall be extremely grateful if these important
issues are looked into and
the necessary changes as suggested are incorporated in the new “MAKE” criteria
under finalization which would help the private industry unleash the full
potential.
Warm Regards
Yours Sincerely
Yours Sincerely
(Kuldeep Kumar Kohli)
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Correspondence Address | V 3/11, PHASE III, DLF CITY, Gurgaon - 122001.
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