This article is written by Vineet Kumar, pursuing Diploma in Entrepreneurship Administration and Business Laws offered by Lawsikho as part of his coursework. Vineet is Presently working as ‘Dy Head of Representative Office, Hanoi, Vietnam’ for Bharat Electronics Ltd India, a Navaratna Public Sector under Ministry of Defence, Govt of India. 

Background

Self-reliance in defense production has been the aim of India’s defense production strategy since the 1960s. Significant progress has been made in the domestic defense production. Private sector and public-private partnership through Joint Ventures (JVs) / Foreign Direct Investment (FDI) has also joined the national effort to build domestic defense and aerospace industry. However, it is also true that despite a few major achievements of our defense and aerospace production ecosystem, an important part of our defense requirements continues to depend on imports. India has become one of the largest importers of defense goods and services in the world. It needs to change. The vibrant domestic defense industry is an important component of effective defense capability, and to maintain national sovereignty and gain military superiority.

The Directorate General of Quality Assurance (DGQA) is an organisation under Department of Defence Production, Ministry of Defence is the regulatory authority for Quality Assurance and final acceptance of military store at various Defence PSUs, Ordnance Factories and Private Firms. It also ensures QA requirements during the acquisition of defence stores by Ministry of Defence as per the provision of DDP & DPM. The primary role of DGQA is to provide QA coverage during various phases of the production/services and to assure user expectations. In addition to QA activities, the organization is responsible for import substitution and is affiliated with the Defense Research and Development Organization (DRDO) in the development projects. It also ensures documentation, codification and standardization action to reduce the diversity of components/devices. Other services provided are promoting technical consultation to small industry, post procurement services, defect investigation and technical consultancy to users, ministry and production agencies.

Need for the Policy

Considering the government continuous effort toward self-reliance in the manufacturing of defence products, the Self-certification scheme assumes greater significance. The scheme is envisaged to promote ease of doing business to achieve the national vision of ‘Make-in-India’. ‘Green Channel Status is one kind of Self-certification status promoted by Govt. of India, Deptt. of Defence Production (DDP) to eligible firms to delegate the responsibility of certifying the Quality of specific products. OEMs take the full responsibility for the quality of such products as well as those of their Indian subsidiary and channel partners in case of foreign company.

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In a fast-moving world of technology, time and quality have emerged as the deciding factor in any manufacturing industry. It is necessary that Defence Suppliers should reduce the time of manufacturing and delivery of the final product with all quality assurance. Hence the objective is to promote the culture of in-built quality in systems and products for better reliability at the same time reduce the processing time for procedural and administrative delays by multiple agencies involved in quality assurance process of the military store.

Eligibility Criteria

This scheme is open to all Indian firms, Defence Public Sector Undertakings (DPSUs), Foreign firms having a manufacturing facility in India, OEM outsourcing the products in their own name/brand and OEM having wholly owned Indian subsidiary. The firm should have an annual average turnover of Rs.1000 crore or more during last three years and making a profit in at least three out of last five years These criteria is not applicable for OEM having wholly owned Indian subsidiary.

Application Process

All the firms that meet the above eligibility criteria will be considered for green channel status and will be allowed to self-certify specific products. However, critical stores for Air-Borne applications, which are governed by Airworthiness certification and QA regulatory requirements, are excluded from the provisions of supply under their self-certification. Criteria/parameter will be decided by DGAQA / CEMILAC to provide green channel status for such stores.

Eligible firms are required to submit the application form and related documents according to the prescribed format. Green Channel Status will be granted for specific products. OEMs will take full responsibility for the quality of such products as well as their Indian subsidiaries and channel partners. Green Channel Firms are adhering to the terms and conditions set out in the contract and governing technical specification of the products. Indenter reserves the right of pre-dispatch inspection (PDI) or joint receipt inspection (JRI) in the specific case.

Accordingly, the eligible firm needs to apply for the grant of green channel status for broad categories of items having continuous requirement / mass consumption in defense forces. Grant of Green Channel Certificates will provide the status of deemed registration for the exemption of pre-dispatch inspections and the acceptance of the stores under guarantee/warranty against the contracts concluded by various procurement agencies under the Ministry of Defense.

Approval Process

Committee head by ADGQA /ADGAQA and members at director level from Principal Directorate, Procurement Directorate, User directorate and any other co-opted member are responsible for assessing the firm’s eligibility for Green Channel Certificate. The committee considers all issues related to the Green Channel, including the grant of green channel status, the revision of the items under the Green Channel. The committee or its authorized representative can go to the manufacturer’s facility to verify the ongoing production line and inspect the product. However, such trips may not be necessary during the validity period of the Green Channel Certificates.

The competent authority for grant of Green Channel status will be DG, DGQA/DGAQA. The compendium of Green Channel Firms/items along with Cert No., and its validity is placed and updated periodically on the website of both the DGQA/DGAQA. The Green Channel status of the firms/ items is reviewed by the Committee as and when required.

Registration Fee

The requesting firms need to pay Rs.1.00 Lakh plus service tax as applicable towards one-time non-refundable registration fee for Green Channel certification to PCDA New Delhi through demand draft. All certified firms with Green Channel certificates are required to deposit an irrevocable bank guarantee of RS.50.00 lakh as security deposit with concerned registering Date of DGQA/DGAQ. The Bank guarantee is required to be made in favour of PCDA, New Delhi, from any Indian Scheduled or its affiliated Banks with the validity of 39 months.

Certificate Renewal

Green Channel Certification will be valid for a period of five years from the date of issue/renewal. Application for renewal should be applied 90 days before the expiry of the validity period. The status of the original Green Channel will be considered valid, provided that the renewal has been implemented at least 90 days before the expiration date and Rs 50 lakhs of bank guarantee has been extended. The renewal will be based on a satisfactory response from the user.

Recurring Defect & Penalty

All customer complaints will be brought to the notice of the committee. In the case of recurring defects during the exploitation/defect investigation, the Green Channel Committee can take one or both penal action of the monetary penalties up to Rs 50 lakh and removal of the company from the Green Channel list for a minimum period of three years. DGQA / DGQA allows green channel firms to be called for participation in fault/defect investigations with respect to their products as required.

Pragmatic Scenario for Policy  

Defense products for the Armed Forces are procured ex-import and manufactured indigenously by the Ordnance Factories / PSUs / Private Industries. Under the Government’s ‘Make in India’ initiative, the defense sector is getting the requisite impetus and support for the development and manufacturing of defense products. Increased participation of the Indian industry in the manufacture of defense products will increase the duties of the Directorate General of Quality Assurance (DGQA) organization, thus there will be more pressure on the available resources.

At present, the DGQA is the main Quality Assurance (QA) organization with the responsibility of ensuring the quality and reliability of defense products for both indigenously manufactured and procured ex-import. In view of possible increase in the workload of DGQA in the near future, the resources available may not suffice and hence need to be increased through certain QA functions to eligible Government / Private bodies. Accordingly, the policies like Green Channel Certification, recently released Self Certification and Third-Party Inspection (TPI) to perform Quality Assurance (QA) Functions pertaining to Defence Stores are the major initiatives by the department of defence production.

In India, the defense forces have to work in the most difficult and inaccessible areas in various climatic conditions. The temperature difference between Thar to Siachen is more than 100 degrees. Both soldiers and equipment have to be rugged enough to tolerate this difference in terrain and hostile climate. In this way, it is mandatory that the equipment should be of excellent quality at the hands of the soldiers and besides being rugged, they should have high reliability too. Therefore, to ensure these aspects, the QA of the equipment should be focused and concentrated. For the effectiveness of QA process, the continuous monitoring of QA inspections done at the time of purchase of equipment is required, feedback from the customer on product quality to be obtained, gaps in quality to be identified and addressed to fix loose ends and fill gaps for future improvements.

Final Say

The initiatives of Green Channel and Self-certification are giant steps from the industry point of view and toward the ‘Ease of Doing’ business commitment of the government. These entire policies look to have been drawn with considerable thought with the purpose of timely supplies of defence stores, which are not only critical but also very essential to national security. However, the success of these policies lies with DGQA strong Quality Audit Process, user feedback, further analysis and improvement of these policies with time and experience.

 Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.