DEFENCE MAKE POLICY

INFRASTRUCTURE & DEFENCE ENTREPRENEURS’ ASSOCIATION

KULDEEP KUMAR KOHLI
PRESIDENT

08 April, 2015

Shri Manohar Parrikar,

Honourable Minister for Defence,

Ministry of Defence,

Government of India,

South Block, New Delhi

Respected Sir,

DILUTING THE CONDITION OF MINIMUM CRISIL/ICRA CREDIT RATING FROM “A” TO “B++” AND “POSITIVE NET WORTH” OF 5% OF THE PROJECT VALUE WITH A MAXIMUM NETWORTH NOT EXCEEDING RS. 750 CRORES.  

“Transparent and swift decisions"  have always been your speciality and you have 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 endeavor 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. Though a detailed list of the changes requested is enclosed at Annexure “A”, but 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 “POSIIVE NET WORTH” criteria of 5%  of the project value with a maximum “NETWORTH” 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:

1.   Asset base of Rs 100 Crore

2.   Turnover of Rs 1000 Crore for last three years

3.   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.

We shall be extremely grateful if this important issue is looked into and the necessary changes as suggested in the enclosed sheet are incorporated in the new “MAKE” criteria under finalization which would help the private industry unleash the full potential.

Thanking You

Kuldeep Kumar Kohli

PRESIDENT

Email: idea.defense.policy@gmail.com