Based on this review and in order to bring greater transparency to the whole procurement process and realizing that the presence of an authorized representative/ agent would improve the delivery of services & follow-up of post contractual obligations, the Ministry of Defence have on November 2, 2001 issued supplementary instructions on the appointment of Indian authorized representatives/agents of foreign suppliers. The authorized representatives would make available information of latest technologies, assist during trials & help in post contractual servicing.

    The salient features are (a) All foreign suppliers who wish to appoint Indian authorized representatives/agent would register them with the Ministry of Defence, (b) The authorized representative/agent could be an individual, a partnership, a limited company Private or Public, (c) The agent must be an income tax payee, (d) The foreign supplier appointing an agent must furnish copies detailing Agreement/terms of appointment of authorized representative/agent, (e) The obligations of an agent will flow from the contract entered with the Ministry of Defence, (f) The foreign supplier will have to declare the payments made to the authorized representative/agent, (g) Particulars relating to agency commission would be reported to the Enforcement Directorate, of Central Board of Direct Taxes by the MOD (h) The agent will be appointed with the approval of the Secretary of the Department and (i) These instructions will be applicable for future contracts only.

    Adequate safeguards have been provided in the guidelines. In case an Original Equipment Manufacturer or his authorized representative/agent is guilty of infringement of the terms of his contract or accreditation suitable penalties have been provided for in the contract and in the guidelines.

    This information was given by the Defence Minister Shri George Fernandes in a written reply to Shri Prabodh Panda and Shri Putta Swamy Gowda in Lok Sabha today.