Government finalises Strategic Partnership model,set to implement policy Featured

  • Wednesday, May 10 2017
Strategic Partnership model to kickstart in 4 segments
- Concept tweaked to introduce competition
- MoD to make a pool of 6 in stead of single nomination
Vishal Thapar
New Delhi, May 10
Ending the long-pending suspense over the most far-reaching step to create space for the Indian private sector in defence manufacturing and procurement, the Government has finalised the Strategic Partnership model and it set to implement it.  
The Strategic Partnership concept will be kickstarted in 4 of the 10 segments identified by the Aatre Task Force in 2016. These are:
1. Single-engine Fighter Aircraft
2. Helicopters
3. Submarines
4. Armoured Fighting Vehicles & Main Battle Tanks
Very significantly, the segmentation also closes the door on twin-engine fighter aircraft, restricting the IAF's choice to American Lockheed Martin's F-16 and Swedish Saab's Gripen for meeting the shortfall of multi-role fighters. 
The Ministry of Defence may add more segments as the Strategic Partnership Model matures. 
Only one Strategic Partner per segment will be selected, sources disclosed. 
Sources indicated that this Model is set to be launched at a meeting of the Defence Acquisition Council (DAC) slated for May 15. 
The most important element of the concept is that the Ministry of Defence will not unilaterally nominate one Strategic Partner per segment, as was earlier envisaged. In a 2-stage selection process, it will, in stead, create a pool of 6 Indian companies which will compete to be nominated as the Strategic Partner in the four segments. Once selected for one segment, a company will not be considered for any of the remaining three. 
Concurrently, a pool of up to 8 foreign Original Equipment Manufacturers (OEMs) will be created. Two OEMs will be shortlisted per segment. The most important factor in the shortlisting of the OEMs will be their technical offers defining the range and depth of transfer of technology. The OEMs will be required to submit a technical bid in response to an Expression of Interest (EoI) within two months. 
RFPs will then be issued to the pool of Indian companies, which will negotiate a tie-up with the shortlisted OEMs to jointly submit their techno-commercial bids. For award of contract, 80 per cent of the weightage will be given to price competitiveness and 20 per cent to technical capability. 
High benchmarks have been set for Indian companies for consideration as Strategic Partner. As part of the minimum qualification criteria, the turnover of the company must be over Rs 4,000 crore for each of the last 3 financial years. The consolidated capital assets need to be over Rs 2,000 crore, and the applicant comoany must have a minimum credit rating equivalent to CRISIL/ICRA 'A'. From the technical standpoint, the applicant must have a demonstrated capability of integration of 'system of systems'. 
Observers reckon that the entities likely to make the cut are Tata, L&T, Adani, Mahindra & Mahindra, Reliance and Bharat Forge. 

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