Govt to Make Payments to Foreign Vendors, Tells Defence PSUs to Restart Work

NEW DELHI: India will honour payments for ongoing defence procurements to be made to foreign vendors but new acquisitions could get slightly delayed as the government has put in place several expense limitations, even as plans are being put in place to resume operations by defence public sector units (PSU).

The lockdown and its economic toll will not impact committed liabilities that have been budgeted for the armed forces for programs like the Rafale fighter jet deal and the S400 air defence systems, sources told ET.

India is also looking at quickly ramping up local defence production, with defence minister Rajnath Singh directing all PSUs to prepare contingency plans for resumption of operations and make up for lost working time at the earliest.

While there is a fear that PSUs and government-owned shipyards that have ongoing programs could see delayed payments because of the restrictions, the minister has said tPSUs and the private defence industry could `play a major role in the economic revival’ of the nation.

On future procurements that have been in the pipeline and were expected to be signed in the coming weeks, sources said, there could be some delays but there are no indications yet that the overall budget would be curtailed for necessary purchases. Among the programs that were expected to be inked in the coming months was the Rs 38,000 crore project to build 83 Tejas Mk1A aircraft by Hindustan Aeronautics Limited. This program has been cleared by the defence ministry but still awaits a nod from the Cabinet Committee on Security.

Source: ET