The Way Forward

The Government must have conclusive  proof that a major breach of probity provisions has taken place. Media reports  and rumours cannot be the sole basis. As has been seen, a majority of media  reports are subjective, biased and even planted to sabotage a deal. This could  be done either by a losing vendor or even by entities inimical to India’s  interests. As has been seen earlier, every blacklisting of a foreign vendor  puts back India’s defence modernisation plans by decades. Undoubtedly, it is  the most cost effective option available to adversaries to impede India’s  defence preparedness.

Retaliatory action must always be well  considered and commensurate with the degree of misdemeanor. It does not have to  be blacklisting at the outset. It is prudent to follow a phased and graduated  approach for two reasons. One, the defaulting vendor gets unambiguous message that  the Government means business and the vendor should exercise due caution in  further dealings. Secondly, should blacklisting become inescapable, the  Government can time it to suit own requirements. In the case of HDW, hasty  action to ban the company deprived India of catalogues and drawings. India  could have easily waited for a few months.

India must also remember that banning a  major foreign vendor may have little effect on his business and India may suffer  more. Thus the whole exercise of punishing a foreign vendor for his alleged  misdemeanor may become counter productive and end up boomeranging on India. In  fact this is exactly what has happened in all cases. We have ended up shooting  in our own foot. There cannot be another example of immature and reckless  decision making. While trying to fix a vendor for his misconduct, we put our  own defence modernisation plans in disarray, with consequent critical capability  gaps and cost overruns.

The Government seems to have realised  the foolhardiness of its policy. It has decided to tread cautiously.  Blacklisting of Bofors has been revoked as the company is now owned by SWS  Defence with considerable equity being held by a US based company. Similarly,  after the clearance by Indian courts in 2005, HDW has commenced participation  in Indian defence business. It has recently been issued Request for Information  for six next-generation submarines with air-independent propulsion systems, a  project worth Rs 30,000 crore.

It is time to close the old chapter,  change our approach and start afresh. Although Denel has been proscribed  recently, the Government should offer a way out by asking it to make good  financial loss with stiff penal deduction. For generating maximum competition  to obtain best deals, the Government has to show maturity, practicality and  adroit handling. Outright blacklisting is the easiest and the most imprudent way  of managing a delicate and highly critical issue.

A sustained and inspired media campaign  was carried out by a small section of press to sabotage Scorpene submarine  deal. It is to the credit of the Government that it resisted all demands to  reopen the case. It is similarly hoped that the current reports against IAI  would be looked into judiciously and an objective view taken. In case any  misdemeanor is proved, appropriate and balanced action should be taken against  both the vendor and the functionaries involved. Blacklisting, however, must  remain the last resort. Cutting off your nose to spite your face can never be  considered a prudent policy.