A new blacklisting policy that will do away with blanket bans on companies indulging in corrupt acts was today approved by the Defence Ministry.
The Defence Acquisition Council, chaired by Defence Minister Manohar Parrikar, also approved projects worth over Rs 82,000 crore for purchase of fighter aircraft, tanks, rockets and mini drones.
Contrary to expectation, the Council did not take a decision on the Navy's proposal to purchase 12 US2I amphibious aircraft from Japan, though the issue came up for discussion.
However, it is expected that there would be some forward movement on this issue during Prime Minister Narendra Modi's upcoming visit to Tokyo on November 11-12.
The DAC also gave Acceptance of Necessity (AoN) to Indian Air Force's plan to purchase 83 Tejas Mark 1A aircraft at a cost of Rs 50,025 crore, Defence Ministry sources said.
It also accorded AON for the purchase of 15 Light Combat Aircraft being manufactured by HAL for the Army and Air Force for a tentative cost of about Rs 2,911 crore.
AoN was also given for the repeat order of 464 Russian origin T90 tanks which are being manufactured by the Ordnance Factory Board for Rs 13,448 crore, besides for procurement of 598 mini UAVs at a cost of Rs 1,100 crore.
However, the most significant take away from the DAC is the clearance of the new blacklisting policy.
Though Defence Ministry officials remained tight-lipped about the features of the new policy maintaining it will be put up on website in the next few days, sources said it will ensure that while companies are dealt with harshly, it will not affect the modernisation process.
As per the new policy, the focus is on graded blacklisting and fines. This means that if a defence conglomerate is caught doing wrong in a particular project, it will be banned for a specific number of years from dealing in that particular segment only.
It can continue to pitch for projects in other segments. "It will be a product specific ban rather than blanket blacklisting. Also, there will be an option for heavy penalties besides those in contract and even individuals can be banned," a source said.
The new policy would also allow many of the stuck programmes, like the heavy weight torpedos for the six Scorpene submarines, to move ahead with clarity.
"The DAC considered and approved the guidelines for suspension or banning of business dealings with entities," a Ministry source said.
The blacklisting policy was earlier supposed to come with the Defence Procurement Procedure (DPP), which was released in March this year, and came in effect from April.
Parrikar said last month that while "criminal activities" like receiving kickbacks should "normally" be punished with a ban, the decisions will be based on requirement of "national security".
In December 2014, a few months after taking over as the defence minister, Parrikar had said that the government is contemplating legalising "representatives" from defence firms, to remove middlemen who work for kickbacks.
He had also said that the government is thinking of reviewing all cases of blacklisted defence firms and may give conditional and limited approval to dealing with some based on merit.
For the first time, the Ministry accorded AoN for two Indigenously Designed, Developed and Manufactured (IDDM) products - LCA and Tejas.
The LCA cost will include those for simulators and auxiliary equipment. While the IAF will receive 10 LCH, the Army will get 5 to begin with.
The mini UAVs approved for the Indian Army will come under the "Buy Indian" category and the force will now issue a tender for the same.
The DAC also cleared the way for the issuance of tender for six additional regiments of the Pinaka rockets for Rs 14,633 crore, sources said.
Each regiment consists of three batteries of six Pinakas and each Pinaka battery comprises six launcher vehicles, each with 12 rockets, six loader-replenishment vehicles, three replenishment vehicles, two Command Post vehicle (one stand by) with a Fire Control computer, and the radar.
(With PTI inputs)