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GREEN CHANNEL POLICY- A NON STARTER?

Department of Defence Production in order to promote ease of doing business for defence industry in order to achieve the national vision of 'Make-in-India' has instituted a mechanism of awarding Green Channel status to firms having predefined financial and quality credentials.

The following entities are eligible to apply:-

  • Indian firms/Public Sector Undertakings
  • Foreign firms having manufacturing facility in India.
  • OEM outsourcing the products in their own name/brand.
  • .OEM having wholly owned Indian subsidiary, having manufacturing facility in India (even if the Indian Subsidiary does not comply with laid down turnover and profitability criteria).

The firms need to  have an annual average turnover of Rs. 1000 crore (Rupees One thousand crore) or more during last three years and making profit in at least three out of last five years shall be eligible for green channel status. The applicant need to apply for broad categories of items having continuous requirement/mass consumption in Defence Forces. However, Critical Stores, meant for air-borne applications that are governed by airworthiness certification and QA regulatory requirements, shall be excluded from the provisions of supply under their own certification. Criteria/parameters for granting green channel status for such stores shall be decided by DGAQA/CEMILAC.

Approval Process

The eligible firms will be required to submit applications and associated documents as per format given. The firm will submit an account payee demand draft drawn in favor of the 'Principal Controller of Defence Accounts', New Delhi, for Rs. 1.00 lakh (Rupees One lakh) plus service tax as applicable towards one time non-refundable registration fee for Green Channel certification.

The competent authority for grant of Green Channel status will be DGQA/DGAQA depending on the product. The certificate will be awarded after assessment by a team constituted as under:-

Chairman: ADGQA (concerned Dte)/ADGAQ

Members:

  1. DDGQA/Controller/Principal Dir/Dir
  2. DDG/Director (Concerned Purchase Dte)/PD (Procurement)

iii. DDG/Dir (User Dte/PD(Concerned Maintenance Cell) / Officer (User Dte)

  1. Any other co-opted member

The Committee shall consider all the issues related to Green Channel including grant of Green Channel status, revision of items under green channel. The Committee or its authorized representative may visit the manufacturer's facility to verify ongoing production line and to inspect the product. However, such visits may not be necessary during the validity period of Green Channel Certificate.

Green Channel Status will be granted for specific products. OEM shall take full responsibility for the quality of such products as well as those of their Indian subsidiary and channel partners. The Firms shall abide by the terms and conditions stipulated in the contract and the governing technical specifications of the products.

Indenter reserves the right of Pre-Dispatch Inspection (PDI) after recording the reasons thereof. Joint Receipt Inspection (JRI) may be carried out as per existing procedure in vogue at the discretion of Indenter.

All those firms which are granted Green Channel certificates will be required to deposit an irrevocable bank guarantee of Rs. 50.00 lakh (Rupees Fifty lakh only) as security deposit with concerned registering Directorate of DGQA/DGAQA.

The status will provide;-

  • Deemed registration status, waiver of pre-dispatch inspection and acceptance of stores under supplier's guarantee/warranty against the contracts concluded by various Procurement Agencies under Ministry of Defence.
  • The approved firms will be allowed to 'self-certify' specific products.
  • A firm granted Green Channel status by any department of Ministry of Defence, will be honoured by all procurement agencies under MoD.

The compendium of Green Channel Firms/items and its validity shall be placed and updated periodically on the website of both the DGQA/DGAQA. The Green Channel status of the firms/items may be reviewed by the Committee as and when required.

Validity/Renewal

  • The Green Channel Certification will be valid for a period of five years from the date of issue/renewal.
  • Application for renewal should be made 90 days before expiry of validity period.
  • Original Green Channel status shall remain deemed valid provided the renewal has been applied at least 90 days before expiry and Rs 50 lakh of bank guarantee has been extended.
  • The renewal will be based on satisfactory feedback from the user.

Defect Investigation

Green Channel firms may be called upon by the DGQA/DGAQA to participate in Defect Investigations in respect of their products as and when the need arises.

All the customer complaints shall be brought to the notice of the Committee. In case of recurring defects during exploitation/ defect investigation, the Green Channel Committee may propose one or both of the following penal action:-

(a)    Monetary penalty of up to Rs.50 lakh.

(b)    Removal of the company from Green Channel list for a minimum period of three years.

Issues and Concern

Continuous Requirement and Mass Consumption

Regular and unhindered supply of defence product is very vital to meet the demand of critical defence equipments which may rise every now and then. Since, defence products are not consumable items, hence these are not much of continuous requirement or mass consumption items. A company can manufacture defence equipment only when it receives an order. Not just order itself but the procedure and technical delay should be tackled by establishing 'Self- Certification' rather than Green channel for such items. Self-certification should be given to the manufacturer and he must be made solely responsible for the goods manufactured and supplied, as in case of some of the automobiles. Self-certification will 'certify' the product supplied by the manufacturer that it meeting all the conditions and specifications with no defect at all. Self-certification will ensure 'quality and standard' supply of defence products. This will save the time spent on investigating the products supplied and enhance speedy  supply of goods.

Multiple Agencies

The competent authority for grant of Green Channel status will be DGQA/DGAQA depending on the product. So there are two different entities. DGAQA has a very limited role as over riding stipulation “Critical Stores, meant for air-borne applications that are governed by airworthiness certification and QA regulatory requirements, shall be excluded from the provisions of supply under their own certification. Criteria/parameters for granting green channel status for such stores shall be decided by DGAQA/CEMILAC”. The above stipulation exclude air borne applications and an additional authority of CEMILAC.

In land systems also there are product which fall in Joint AHSP responsibility of 2 or more Directorate of DGQA for example Electro-optics, Platforms having weapon and Electronic sub systems etc. The issue is - which Directorate will be leading and where does the firm make an application?

In addition the policy is silent on product range responsibility of DGNAI.

Product Liability

Till now the defence production was with the public sector and consumers were also the  government entities, i.e. manufactured and used by the government only and the product liability issues were never came up to this extent. But now there is a visible change in trend, with the induction of private firms in the defence manufacturing, a new concept emerges that is 'accountable' it means 'to be accountable for acts and omissions'. Every manufacturer shall be made liable for the 'defective product' supplied by it. If the product shortfalls the 'quality standard' prescribed, the manufacturer be it private or public sector will be held liable to pay monetary penalty of rupees up to 50 lakh.

The policy on face of it is a good initiative and need to see its intent implementation in a pragmatic spirit. There have been some enquiries on the subject by industry from Private sector. As of now no private or public companies have applied for grant of status. Why it is so?  MoD may seek input from industry for lack lusture response.

 

1 Response

  1. Gen,
    Great to talk to you, very informative,and usefuull guidance for devolpment work related to Defence Industry,you all are doing. Hope to meet up with you and learn,
    best rgds and Jai Hind

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