Green Channel Policy of MOD India

Background:

Post-Independence, India's defense preparedness in terms of defense infra was very pathetic. The country with a divided landscape with newly formed East and west Pakistan had to share everything with the newly formed neighbors and the only thing left was a huge population to take care of and the motivation of the people to take care of their country on their own. Since independence, till few years ago not much had changed with regards to the defense infra available in India. India is still dependent on foreign countries for defense supplies in terms of arms, ammunitions, sophisticated guns, bullets, tanks, state of the art fighter air crafts and above all expensive technology along with use of spares for all the infra being used. This kind of preparedness was not only making India dependent on the foreign supplies for any kind of war preparedness but was also very riskier in terms of availability/ regularity of supplies in terms of actual war/ war like situation.

This was also draining out huge foreign exchange for importing the supplies. In recent years, it was learnt and accepted that the country needed immediate revamp of policy to make the country self-reliant in terms of defense production and preparedness. Introduction: With the vision to make India self-reliant in terms of defense production and preparedness, and to promote ease of doing business to achieve the India's vision of 'Make In India' it was decided to device a mechanism to award a Green Channel status to firms having a certain predefined set of financial and quality aspects for a broad category of items having regular and high consumption in the defense sector.

Accordingly, such a policy was formulated with the approval of defense minister. The so called' Green Channel Policy' defines the basic eligibility criteria for firms for grant of the Green channel status, formation of a committee for Green Channel, Registration of eligible firms, Bank Guarantee submission, validity/ renewal of the green channel certificate, introduction of penal clauses for repetitive defects and its investigation and taking actions on the same. Thus as per this policy any firm accorded a Green Chanel status by any department of MOD, will be accepted and honored by all procurement agencies under the MOD.

Eligibility: It was decided to accord such a status to the firms having annual turnover of Rs 1000 crores or more during last three years and making profit in at least three out of last five years. Categories of firms to be included are as follows: Indian Firms/ PSU's Foreign firms with manufacturing facility/ setup in India OEM outsourcing the products under their own name/ Brand OEM with wholly owned Indian subsidiary with manufacturing facility in India (Even though the Indian subsidiary does not comply with the laid down criteria for turnover and profitability)

Self-Certification and other parameters:

Firms fulfilling the eligibility criteria shall be considered for the Green Chanel status on self-certification basis. However critical applications/ stores meant to be used in case of air borne applications and QA regulatory requirements shall be excluded out of self-certification. Their Green channel status shall be decided by DGAQA/ CEMILAC. The eligible firms need to have a average annual turnover of Rs 1000 crores or more during the last three years and be in profit in at least three out of last five years to be eligible for the Green Channel status. All eligible firms shall be required to submit necessary documents in the given format and abide by the terms stipulated in the contract along with the technical specifications of the products.. Green channel status shall be accorded only for specific products. OEM shall be required to take full responsibility of their products as well as products of its India subsidiary and its channel partners.

Approval Process: Committee of Green Channel:

It would constitute the following: Chairman: ADGQA (Concerned dte)/ ADGAQA The Committee shall consist of the following members: DDGQA/ Controller/ Principal Director/ Director DDG/ Director (Concerned purchase Dte) DDG/ Dir ( Use Dte/ PD (Concerned maintenance cell)/ Officer (User Dte) Any other coopted member The committee shall consider all the issues relating to issuance/ grant of Green Channel status to the eligible firms including grant of such a status and revision of items/ products under green channel. Further it shall possess rights as to revision of status along with visit to manufacturer's unit for inspection of the product. However, visit to the manufacturing unit may not be necessary during the continuance of the green channel status. The competent authority for grant of the Green channel status shall be DG/ DGQA/ DGAQA. All details as to Green channel firms/ items/ along with certificate number and its validity shall be periodically updated and put up on the website of both DGQA/ DGAQA. The committee shall have the rights to review the status of the firms and take appropriate actions as and when required.

Registration for the status:

All eligible firms shall be required to deposit one-time registration fees (Nonrefundable) of Rs one Lacs plus GST to the' Principal controller of defense Accounts, New Delhi'. Green Channel Bank Guarantee: All firms who have been accorded the Green Channel status will be required to deposit an irrevocable bank guarantee of Rs 50 Lacs as security deposit with the concerned directorate of DGQA/ DGAQA

Such a status would provide:

Deemed registration status, waiver of predespatch inspection and acceptance of stores under suppliers guarantee/ warranty against the contracts concluded by various procurement agencies under MOD. The Green channel accorded firms shall be allowed to'self-certify'specific products/ items. A firm with Green channel status shall be honored by all procurement agencies under MOD for ease of business.

Validity / Renewal of Green Channel Certificate: The Green channel certification status will be valid for five years from the date of issue/ renewal Renewal application should be made 90 days prior to the expiry of the validity period as stated. Customer Feedback: Any type of complaints shall be brought to the notice of the committee.

In case of recurring defects, the committee may propose: Penalty of Rs 50 Lacs Removal of the firm from Green channel list for a minimum period of three years Defect Investigation: Green channel firms may be called/ asked for by the DGQA/DGAQA to participate in defect investigations in respect of their products as and when the need arises. The Government reserves the right to review the said policy and make changes whenever deemed necessary and amend the said policy as per requirements.

Issues and apprehensions:

Continuous requirement and mass consumption: A defense supply at the right time and in regular quantities is very vital to meet the needs of the country. Since such a supply may be irregular and may sometimes be erratic due to such supplies not being goods of mass consumption, they must be taken care of in terms of quality and timings. Since defense equipment can be manufactured only on receipt of the order, hence procedural and technical delays may be avoided by using the'self-certification' basis rather than green channel for such items. A manufacturer assigned the rights of self-certification would be made solely responsible for the quality of the goods supplied. It would certify that the said goods meet all the basic criteria and specifications and the'quality and standard'. This would lead to lot of saving on time , efforts and energy on investigating the products and ensure speedy supply of goods.

Multiple agencies:

Either DGQA/ or DGAQA will be the competent authority for grant of green channel status. DGAQA has a very limited role as overriding stipulation'Critical stores, meant for air borne applications that are governed by air worthiness certification and QA regulatory requirements, shall be excluded from the provisions of supply under their own/ self-certification. DGAQA/ CEMILAC shall decide the criteria for granting Green channel status for such stores.

Hence airborne application are excluded and an additional authority of CEMILAC has been introduced in case of excluded supplies. In case of Land systems also, there are various goods which are falling in joint responsibility of multiple directorate of DGQA i.e. Eltro Optics, Platforms having weapons and Electronic sub systems. The issue is which directorate shall take a call regarding the matter and receive the applications from the eligible firms for this. Accountability: Until few days ago, the supplier and consumer of defense goods were both from public sector and hence the product liability issues never arose to a considerable extent.

But now with the induction of private players, a visible trend is being seen wherein the private players have been made clearly'accountable' for all' acts and omissions'. Every supplier/ so called manufacturer shall be liable for the' defective' product supplied by it. In case there is a issue of'quality standard' the supplier/ manufacturer shall be liable to a monetary penalty up to Rs 50 Lacs.

Present Status and Way ahead:

The policy introduced by the MOD seems to be an excellent start, but the intent is still to be tested in the right spirits. The entire policy looks to a have been drawn with considerable thought with the purpose of ensuring'Just in time' approach to ensure the defense supplies which are not only critical but also very essential to the national security. Thus, the approach along with intent is good with bright silver lining. As of now there have been few enquiries on the policy with MOD but the fact is that no firm has yet applied for the grant of status. MOD must seek proper response / feedback from the industry for this poor response.