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The Indian defense ministry has finalized its roadmap for the selection of private sector companies for mega military production orders, with an elaborate procedure spelt out in a new policy to be unveiled during the coming weeks. Financial strength, technical capability and existing infrastructure will be the main criteria for selection of the Indian companies while foreign partners will be selected in a parallel process on technical and commercial grounds. reported that the defense ministry’s new strategic policy (SP) model will create a pool of six Indian companies that will be accorded special status. Once the pool is created, the companies will be given the opportunity to bid for mega defense production orders, expected to be worth over $20 billion.

The procedure’s first stage will see six Indian companies qualify to bid for four upcoming projects – submarines for the navy, a single-engine fighter for the air force, helicopters and armored vehicles for the army.

The new policy means that almost all memoranda of understanding (MoUs) that have been signed between Indian companies and foreign players over the last three years for these projects will be revoked, given the new model of selection. “The defense ministry will invite companies for the qualification process. The companies will be asked to give their priority preference for the four projects. A total of six companies will be selected based on financial parameters and capability,” a senior official explained.

The ministry has an ambitious target of nine months to select the pool of Indian companies. The selection will be carried out in a five-step process, starting with financial and technical evaluation that will have certain criteria.

Meanwhile, the ministry will initiate work to track foreign partners for the four identified projects. This selection will be based on technical evaluations and field trials. Once the foreign vendors are shortlisted, the Indian pool will be invited to plan collaborations and present joint proposals that will be the basis of a final selection.

As per the policy, one Indian company will be allowed to participate in only one strategic partnership project to avoid a monopolistic situation. With this model, the ministry is hoping to avoid questions about competitiveness and price discovery, given that a pool of both Indian and foreign vendors will be competing for collaborative projects. “Concerns that were raised from various quarters, including from within the ministry, have now been addressed,” the official said.

While the industry is relieved that the stalled process – the SP model has been in the works for over two years – has got back on track, top executives said that they are waiting for the fine print of the policy that will contain details about the selection process.