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A statement issued by the defence ministry said an individual or a company could be appointed as the authorised representative, agent, sales consultant or adviser of foreign defence suppliers after fulfilling certain conditions.
The government had decided on September 11 to lift the ban on agents as part of measures aimed at streamlining the procedure for acquiring military hardware. The defence ministry has constituted a Defence Acquisition Council and a Defence Procurement Board as part of this process.
The Central Vigilance Commission (CVC), which probed several defence deals that were under a cloud because of allegations of payment of kickbacks, had recommended on open system of registering agents.
The scale of commissions payable to agents will have to conform to guidelines determined by the defence ministry in consultation with the finance ministry.
Details of such commission will have to be reported to the Enforcement Directorate, which will share this information with the Central Board of Direct Taxes, the Central Board for Excise and Customs and the Reserve Bank of India to prevent leakage of foreign exchange and tax evasion.
Foreign suppliers will be asked to furnish a 'legally effective undertaking' that they will not make any illegal payments for winning a defence contract. If this undertaking is infringed, the suppliers will have to pay specified penalties.
The Centre had imposed a ban on defence agents and middlemen in April 1989, five years after the Bofors scandal, which became synonymous with corruption in high places.
Before the ban, foreign defence suppliers were only required to give an undertaking that they were not employing agents.
Kickbacks amounting to about $50 million were allegedly paid to clinch a $1.3 billion deal for Bofors to supply 410 howitzers (155mm) to the Indian Army.
"The new guidelines will make things more transparent," a senior defence ministry official told IANS. "After the ban was imposed on them, defence agents never went away. They simply went underground but continued to play a part in arranging defence deals."
The sting operation conducted by Internet portal tehelka.com to uncover irregularities in defence deals had also shown that several retired military personnel were acting as advisors for defence deals.
Defence Minister George Fernandes had resigned from his post in March in the wake of Tehelka's disclosures, before making a comeback in October.
The defence ministry said agents could be paid a retainer or a commission or reimbursed their expenses by defence suppliers 'on completion of a specified obligation'.
A foreign firm wishing to appoint an Indian agent will have to inform the defence ministry and furnish full details of the agent. The foreign firm would also have to inform the defence ministry as to whether the agent is a 'retired civilian or defence service Officer'.
All details about the 'previous professional background' of the agent will have to be provided. The agent must be an income tax payee, have a permanent income-tax account number and disclose details of bank accounts held within and outside the country.
"The nature of services to be rendered by an agent and the commission payable to him shall unambiguously be reflected in the contract," the defence ministry statement said.
Any foreign supplier that fails to disclose the appointment of an Indian agent can be banned from business dealings with the government or asked to pay damages.
Indo-Asian News Service
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