Critically examine the Aatre Committee reports on 'strategic partnership model' (SPM) in defence sector.
Published: March 2, 2016
Recommendations of Aatre Committee:
Comprehensive financial, technical evaluation process for selecting private sector partners for ‘strategic projects’ over Rs.10,000 crore.
Identification of ten eligible segments for strategic partnerships divided into 2 groups.
The task force has identified five critical segments out of the ten for immediate strategic partnership in the first phase. The five segments are aircraft, helicopters, submarines, armoured fighting vehicles and ammunition.
To ensure that only Indian companies can be a strategic partner, norms have been laid down.
Applicants cannot have a composite foreign direct investment (FDI) of over 49 per cent, including all types of investments and the chief executive must be Indian.
The task force has recommended a committee consisting of defence sector experts for identifying a suitable private player as strategic partner by following a three step selection process.
In case of non-performance by a strategic partner or in extreme situations like war, the government would have rights to take over control of the strategic partner.
It recommended for setting up of an independent regulator, a new audit wing and a special strategic partnerships wing in the defence ministry.
The minimum lock-in period for a strategic partner should be 20 years.
However experts feel that the Aatre process would benefit only the big firms. The big five of the Indian private sector defence industry could corner around 80% of the business leading to the return of “crony capitalism”.
Model Questions Category: 081 - Indigenization of Technology and Developing New Technology