Tatragate India: Tatra ban lifted

NEW DELHI: The government is open to reviewing cases of blacklisted defence firms on merit as it prepares a new policy that will allow foreign defence firms to legally hire agents, Defence Minister Manohar Parrikar has said.

He added that banned firms can be conditionally allowed to do business in the country. “Based on merit and necessity, one can think of lifting the ban to a reasonable level,” he said.

Parrikar said state-run Bharat Earth Movers Limited (BEML) has been allowed to supply spare parts for Tatra trucks, as long as it does not deal with the British subsidiary of the company that was banned following irregularities in its deal with BEML.

He pointed out that one should not just go by the name Tatra as there are 3-4 companies which make the trucks.

“The company which has been banned is Tatra UK and we have permitted BEML to deal with the original company which is owned by different people now,” he said, adding the condition is such that it should not have relations with “questionable individuals”.

“A restricted Non Objection Certificate has been granted to BEML, because we do need for defence purpose Tatra vehicles. It has become critical for certain applications,” he said.

Heavy vehicle maker Tatra was banned in March 2012 after then Army Chief General V K Singh’s allegations that he was offered bribe to clear sub-standard trucks supplied by the company to the Army.

Meanwhile, the Congress has reacted sharply to the defence  minister’s statement.

Senior party leader and spokesperson Abhishek Manu Singhvi said, “It is a serious issue, the government should call an all-party meeting to take the views of other political parties. This is not a matter that can be decided through the Defence Minister’s off-the-cuff remark.”


Defence procurement in the country has been hobbled by charges of corruption and of illegal commissions pocketed by middlemen. It became a political storm with the Bofors’ Rs64-crore kickbacks story with Rajiv Gandhi losing the 1989 election. Ever since, arms purchases had become hot potatoes as it were. The Tehelka sting operation about payments to politicians and army personnel in 2001 had led the then defence ministerJaswant Singh in the NDA government to set up a committee under BG Verghese to evolve a clear defence procurement policy (DPP). Thirteen years later, Singh’s successor in NDA-II, Manohar Parrikar, has revealed that a new DPP will be announced soon.

Parrikar has also indicated that arms agents, he uses the term technical representatives, will be allowed to participate in the process of purchases. Ministry sources, according to agency reports, have said that these technical experts will be allowed a fee but no commissions or bonus on the purchases. It is easy to quibble over the terms and argue that middlemen in arms deals are being allowed in through the back door. But the need to be less rigid and more practical in these matters is dictated by the exigency that critical arms acquisitions are getting unduly delayed because of the controversies created around major arms purchases.

As part of this new pragmatic approach, the minister has allowed public sector unit, Bharat Earth Movers Limited (BEML) to supply spare parts to Tatra trucks which involved partially lifting the ban against Tatra. UPA-II had imposed the ban after the then army chief and now minister of state for north-eastern affairs, VK Singh, claimed that Tatra offered a bribe to him. Parrikar has found a technical way out of the impasse saying that it was Tatra UK, a subsidiary of the mother company, which was banned and there is no restriction in dealing with the other units of the company. Again, it is possible to criticise him saying that this is but a fig leaf. It has been found that Tatra trucks are crucial for the army and it is to deal with this pressing need that the ban has been partially lifted.

Parrikar’s pragmatic approach is free of his party’s shrill rhetoric against corruption when it was in opposition, and his willingness to take decisions based on the country’s security needs. He is not taking the rigid position that any company which has been blacklisted will always remain on the list. He has given enough indications that there will be a review of those decisions. As a matter of fact, this makes a lot of sense because an erring foreign arms company should be penalised for breaking rules, and the penalties imposed should be punitive so that giving and taking of bribes will become counterproductive. It should not be kept away if its wares are crucial for the armed forces.

Prime Minister Narendra Modi’s plan to make India an arms manufacturing hub will take time to take root and become a reality. In the meanwhile, there is no escape from making huge defence purchases from foreign companies. The need then is to establish these purchases on a firm and clear footing. There is need for an open debate on the issue of arms agents and the commissions they get paid by the companies they represent. Ways have to be found to prevent the commission amount being factored into the final price.