Top officials of Defence Ministry and the armed forces will meet this week to brainstorm on the blacklisting policy and the report on strategic partnership submitted by former DRDO chief VK Aatre.
Defence sources said that the Defence Acquisition Council, chaired by Defence Minister Manohar Parrikar, will meet on February 23.
On the agenda is the report submitted by the high-level task force, they said.
While the ministry has already firmed up the new Defence Procurement Procedure, the issue of blacklisting of defence firms accused of corruption remains. This will also be discussed during the meeting.
Parrikar has said that random and complete blacklisting of firms hampers defence modernisation, a view shared by the armed forces as well.
But the main issue the defence firms are interested in is the Aatre report, which has recommended that one company cannot be eligible for multiple partnerships.
This means that each company would be restricted to just one critical segment in the overall multi-billion dollar defence manufacturing sector.
The task force in its report has divided the sectors eligible for strategic partnerships into two groups.
Segments in Group 1 are aircraft, helicopters, aero- engines, submarines, warships, guns (including artillery guns) and armoured vehicles, including tanks.
In Group 2, the segments are metallic materials and alloys, non-metallic materials (including composites and polymers) and ammunition, including smart ammunition.
However, it has recommended that in the initial phase, aircraft, helicopters, submarines, armoured vehicles and ammunition be considered for strategic partnerships.
The feeling among private industry players is that only the big firms will benefit out of this. However, even the large firms are not for the idea since they feel they would be restricted to just specific fields and, therefore, their overall investment and plans will get affected.
An official in a defence firm, who did not want to be named, said, "It creates the grounds for nomination of a private sector business partner for award of defence contracts on an exclusive basis in each of the major categories in defence production."
Claiming it may herald a return of "crony capitalism", an industry source said, "The Aatre process could enable the big five of the Indian private sector defence industry to corner about 80 per cent of the business and create monopolies in all categories."
Also, "restricting one group to one platform is unprecedented. Globally, every large defence firm has a land, air and naval segment", a defence company official said.
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Parrikar also said a new Defence Procurement Manual and a
separate manual for Ordinance Factory Boards will also be issued in the coming months.
DPM will most likely be notified in June after OFB manual is updated, Parrikar said.
Asked about the strategic partnership model, the Minister said once it comes into force, it will speed up projects.
He said the focus will first be on ammunition, followed by P75I submarine project and possibly a chopper and a fighter contract.
"Aim is to start 1-2 projects under the strategic partnership model by the end of this year," he said.
Talking about small scale and medium industries, the Minister said the new DPP helps them a lot.
He said credit must be given to small scale industries for surviving despite "stiffling and chocking" atmosphere that has existed.
Meanwhile, asked about the pending Rafale fighter deal, he said his objective was to save money for the country and his is working on it.
Replying to queries on whether he will allow the Pakistani Joint Investigation Team to visit Pathankot Air Force base, the Minister said he will take a call when it comes to crossing the bridge.
