Exchange Rate Variation in Defence Contracts in India: Charting a Way Forward for MoD Beyond the New MoF Memorandum

Abstract

Recent depreciation of the Indian Rupee saw increased advocacy by certain sections of the Indian industry for exchange rate protection in government contracts, and one occasion, for incorporating the same in the Public Procurement Bill that was recently placed by the Government before the Parliament. This short academic note analyses industry demands and reviews existing regulations in IT and defence procurement markets, culminating with suggestions on a possible way forward for reforms that can avoid certain adverse implications of industry demands, particularly in view of their potential conflict with important national public policies fostering indigenisation and domestic manufacturing in India.