Expediting Negotiation in Defence Contracts
Finetuning negotiation protocols and limiting the scope of negotiations could result in rapid conclusion of negotiations and contract finalisation.
- Amit Cowshish
- June 19, 2020
India spends a significant amount of resources on its national defence. Efficiency in utilisation of resources is not only an economic imperative but vital for defence preparedness. In view of this, the Defence Economics and Industry Centre was created in 2006 to promote research on various economic aspects of India’s defence. Since its inception, the Centre has undertaken a number of policy relevant studies besides constantly engaging vital stakeholders (Ministry of Defence, Armed Forces and Industry) on a range of issues. The major focus areas of the Centre are:
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Finetuning negotiation protocols and limiting the scope of negotiations could result in rapid conclusion of negotiations and contract finalisation.
The draft offset guidelines 2020, with revamped features, is a bold attempt at attracting technology and investment as well as promoting defence exports. However, the MoD may consider further refining some of the features of the revised guidelines.
Self-reliance in defence may be better realised if India’s military instrument were to be shaped by political guidance and geopolitical considerations instead of being carried away by the contemporary winds of COVID-19.
Although the new measures announced to fast-track the defence sector are significant, they do not add up to a comprehensive and overarching reforms package.
Inclusion of new clauses in the draft DPP-2020 and changes made in some of the existing ones are intended to make the SCD more comprehensive. However, there is a scope for bringing about textual clarity in the new as well as some of the existing clauses of the SCD, especially those which have been modified.
Redrafting the chapter on post-contract management, expatiating the concept of contract operating officers and clearly defining their role and responsibilities vis-à-vis the other agencies, could go a long way in serving its purpose.
It would be advisable to review the proposed offset guidelines keeping in view the feedback from the industry, especially the foreign vendors who carry the primary obligation to execute the offset contract, as also the legacy issues.
Smaller, smarter, potent and cheaper combat entities — linked and networked – will be at the heart of future warfare.
The inevitable reprioritisation of the central government’s expenditure in the coming union budgets would affect the resource allocations particularly for big ministries like the MoD, which will be forced to realign their business practices.
Given the rapidly rising pension liability in India and the concern expressed by the CDS, the experiences of the US and the UK could be useful in carrying out pension reforms in India.



