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New Delhi: Defence Secretary Rajesh Kumar Singh has issued a tough warning to the domestic defence industry, making it clear that contracts under emergency procurement will be foreclosed if companies fail to deliver within the stipulated timelines. He said the new regime will apply to emergency procurements being undertaken by the armed forces, where delivery has to be completed within one year of signing the contract.
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Defence Secretary said he was upset with the “tendency to overpromise and underdeliver” and stressed that timely execution would now be enforced through stricter contractual action. He announced that “in the current round of emergency procurement, we have actually taken a very tough stand that any case where delivery is not done within one year, it will all be foreclosed,” adding that this would apply “irrespective of who it is, which company or which country.”
His comments follow closely on the heels of Chief of Defence Staff Gen Anil Chauhan flagging concerns over delays by vendors in meeting delivery schedules. Addressing a seminar of the Indian defence industry, Gen Chauhan had said, “We expect a bit of nationalism and patriotism in your profit-driven endeavours,” and cited Army feedback that for “5th and 6th EP procurements, most of the people have over-promised things and they have failed to deliver in that time frame.”
Speaking at a Defence conclave organised by news agency ANI, Singh underlined that supply disruptions were not confined to Indian manufacturers alone and also stemmed from overseas factors. “The delays are not only by domestic manufacturers. You’ve seen the S-400s getting delayed due to conflicts. Israel’s orders are also delayed due to the conflicts it is facing. There are supply chain issues with the general electric engines. All of it is not solely attributable to domestic manufacturers. But, there is a tendency to overpromise and underdeliver,” he said.
The Defence Secretary said the ministry now needs to “be cracking down more and imposing higher LD costs (Liquidated Damages),” describing LDs as a pre-determined sum written into contracts, payable in case of specific breaches such as delays. He indicated that tighter enforcement of LD provisions would be part of the effort to bring discipline into execution and ensure that project timelines are treated as sacrosanct.
Reiterating the government’s stance on emergency buys, Singh said, “I seek to ensure that it is done, irrespective of who it is, which company or which country, we will foreclose every contract after one year.” He added that “those types of decisions will bring in some sort of accountability when it comes to delivery milestones,” signalling that adherence to timelines will now be a central parameter in defence contracting.
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