Mr Amit Cowshish is a former Financial Advisor (Acquisition), Ministry of Defence and former Distinguished Fellow, Manohar Parrikar Institute for Defence Studies and Analyses, New Delhi. Click here for Detailed Profile
While the purpose of the Fall Clause, a price safety mechanism in rate contracts, is indubitable, some issues concerning its applicability and implications, both for the buyer and the seller, merit a review.
A dynamic offset policy has to include a mechanism for identifying the causes for likely delay or default on the part of vendors in discharging their obligation and removing the impediments faced by them
Shortage of funds even to service the committed liabilities raises questions about the financial affordability of the defence modernisation programme and viability of the push for ‘Make-in-India’ in defence.
It is important to pay greater attention to the system of costing followed by the MoD given that costing errors could result in the sanctioning of an unaffordable procurement programme, contract being awarded at a higher price, cost and time overruns, and default on contractual commitments.
Mutual and shared interests between India and the US must form the basis of an enduring solution to the quandary presented by the provisions of the Countering America’s Adversaries through Sanctions Act.
The Cell will remain hamstrung if its powers are not clearly defined, especially in regard to securing budgetary support which is to be provided by the Director General of Quality Assurance.
Objectives and resources have to be in sync with each other and if adequate resources cannot be provided objectives have to be suitably recalibrated and alternative ways found to achieve them.
The challenge lies in demonstrating to potential importers that India, currently the world’s largest arms importer, has the capacity to manufacture and export the equipment required by their armed forces.
The promises contained in the recently released draft are so intertwined that a comprehensive action plan would be required to implement all of them almost simultaneously for achieving the policy objective.
The new system of classifying enterprises based on annual turnover will be more reliable, transparent and objective as the qualifying criteria will be verifiable with reference to the data available in the Goods and Services Tax network.
Fallibility of the Fall Clause
While the purpose of the Fall Clause, a price safety mechanism in rate contracts, is indubitable, some issues concerning its applicability and implications, both for the buyer and the seller, merit a review.