The Defence Ministry has cleared the draft of the new blacklisting policy, which is now being vetted by the Attorney General, that seeks to act harshly against wrong doers but also ensures that much needed modernisation plan for the armed forces are not affected.

"The file has been cleared. It is now with the Attorney General for legal vetting. It will be issued as soon as his office clears it," a top defence official told PTI.

Defence Minister Manohar Parrikar has been working on the new blacklisting policy for long and has held numerous meetings with various stakeholders on the issue.

Sources said the new norms will be a mixture of heavy fines, graded blacklisting and other penalties.

The move comes just months after the Defence Ministry laid down norms for engaging agents in defence deals.

Foreign defence firms can now appoint ‘agents’ to market their products to the armed forces and the government but with strict oversight which includes opening up of company’s books to scrutiny besides not allowing any success bonus or penalty fees among other measures.

The defence forces were hit hard by existing blacklisting norms under which the previous government had blacklisted many critical firms under a blanket policy.

Parrikar had earlier voiced his concerns over indiscriminate blacklisting of companies supplying defence products over "small issues".

However, he had insisted that "serious crimes" should not go unpunished.

Parrikar had in June told PTI that the government will not hesitate to buy a product from another company even if any equipment or software manufactured by the blacklisted entity was embedded into it.

"Globally, many products have components from various companies. While a company which falls under the blacklisting purview will face action, we will also ensure that the policy does not affect any procurement from another company not related to the blacklisted one," Parrikar had said.