Question: Will the Minister of DEFENCE be pleased to satate :-

(a) whether Government is of the view that dependence on foreign companies to procure equipment / material for the defence requirement of the country paves way for one after another kickbacks in deals / scam like the recent one in VVIP chopper deal worth `36,000 crore;

(b) whether Government is contemplating to encourage private sector within the country to avoid such type of scam; and

(c) if so, the details thereof?

Answer: Minister of Defence (Shri A.K. Antony)

(a) All Capital procurements are done as per Defence Procurement Procedure (DPP). Procurement is sourced from both domestic and foreign sources depending on threat perception, operational challenges, technological changes and available resources.

(b) & (c): With a view to achieve greater self reliance in Defence production, the Defence Industry was opened up for Indian Private Sector participation in May 2001 with FDI permissible upto 26%, subject to licensing. The ‘Make’ Procedure was promulgated in 2006 to encourage indigenous development. Government included a categorisation ‘BUY & MAKE (Indian)’ in the Defence Procurement Procedure in November, 2009 to encourage indigenous production. There is also provision for 30% offset obligation in all Capital Acquisitions categorized as Buy (Global) or Buy & Make with Transfer of Technology (ToT) where the estimated cost of the acquisition proposal is Rs.300 crore or more. Further, Government has announced the Defence Production Policy in January, 2011 and Joint Venture Policy for DPSUs in February 2012. Government is in the final stage of amending the Defence Procurement Procedure.

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