In an important fallout of the public sector undertaking Bharat Earth Movers Ltd (BEML) selling "over-priced" Tatra trucks to the Indian Army, Defence Minister AK Antony has instructed the three service Chiefs that PSU's shall not be the preferred in awarding defence contracts.
Antony had told this to Admiral Nirmal Verma, Air Chief Marshal NAK Browne and General Bikram Singh during the Defence Acquisition Council (DAC) meeting at South Block on Friday.
According to sources while underlining the importance of "indigenisation", the Defence Minister said: "awarding contracts on nomination basis to the PSU's will be discouraged. Greater competition will be infused gradually."
Reiterating his commitment to "transparency" in the defence procurement, Antony told the DAC which decides what needs to be purchased and in what quantity for the armed forces said that the open tenders should be the norm in defence procurement unless situation demands urgency.
"Unless it (procurement) is operationally very important nomination should be discouraged," sources added.
This is a big news for the private players in the defence sector who have been demanding a level playing field in comparison to the Public Sector defence majors who have the advantage of sustained funding and captive buyers. In Antony's words, "The private players will be given level-playing field gradually. So that they do not complain in future," sources added.
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