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Government amends defence procurement procedure to boost indigenisation

Source : IANS
Last Updated: Sat, Apr 20, 2013 13:30 hrs

New Delhi, April 20 (IANS) The government Saturday amended Defence Procurement Procedure (DPP) to improve efficiency in the procurement process, strengthen defence manufacturing base and provide a level playing field for Indian firms in the defence sector.

An official release said that Defence Acquisition Council, the apex decision-making body of the Defence Ministry, took a series of decisions including amendments to DPP.

"With the twin objective of infusing greater efficiency in the procurement process and strengthening the defence manufacturing base in the country, the Defence Acquisition Council took a series of decisions today, including amendments to Defence Procurement Procedure (DPP)," the release said.

Defence Minister A. K. Antony, who chaired the meeting, said the only way forward for the country was rapid indigenisation of defence products with both public and private sectors playing pivotal role in the endeavour.

He said the government will make all efforts to create genuine level playing field for Indian manufacturing industry vis-a-vis global players.

According to amendments decided by the council, preference for indigenous procurement in the Defence Production Policy 2011 has now been made a part of DPP with a preferred order of categorisation and global cases being the choice of last resort.

"The order of preference, in decreasing order, shall be: (1) `Buy (Indian)'; (2) `Buy & Make (Indian)'; (3) `Make'; (4) `Buy & Make with ToT (transfer of technology)'; and (5) `Buy (Global)'. Any proposal to select a particular category must now state reasons for excluding the higher preferred category/ categories," the release said.

The financial powers of service chiefs and DG Coast Guard for capital acquisition have been enhanced from Rs. 50 crore to Rs. 150 crore.

The DAC approved the release of a public version of its 15-year perspective document Long Term Integrated Perspective Plan outlining the "Technology Perspective and Capability Roadmap" (TPCR) against LTIPP 2012-2027.

The release said TPCR will provide useful guidance to the Indian defence industry to boost its infrastructure capabilities and in directing its research and development and technology investments.

It said that Maintenance ToT (MToT) has been hitherto reserved largely for ordance factory board (OFB) and Defence Public Sector Units (DPSUs) through the nomination process.

To boost private sector participation in maintenance, repairs and overhaul work, an amendment has been made to DPP which does away with nomination by Department of Defence Production and facilitates selection of MToT partners by Indian bidders.

The release said that the DAC has approved an amendment mandating consultations to begin sufficiently in advance of actual procurement by Service Head Quarters (SHQs) so that capital acquisition plans can be translated into national defence research and development and production plans.

"In addition, a high-level committee has also been constituted for simplification of `make' procedures, with a view to unleash the full potential of this important category," the release said.

The DAC has approved an amendment simplifying "Buy & Make (Indian)" procedure for faster processing of cases under this category.

The release said that increased indigenisation was important for the armed forces so that they have access to reliable supply chains in times of urgent need.

Under the amended DPP, indigenous content has been defined in an unambiguous manner providing "requisite clarity and a common understanding."

The release said that the defence ministry has a limited number of acquisition cases under "Make" and "Buy & Make (Indian)" categories with an estimated value of Rs. 1,20,000 crore and instructions have been issued for speedier conclusion of these cases.

Indian defence industry was opened up in May 2001 for 100 percent private sector participation subject to licensing.

The release said that Defence Items List has been finalised by the ministry and sent to Department Of Industrial Policy & Promotion (DIPP) for notification, which will bring required clarity in the licensing process.The Ministry has categorically clarified to DIPP that dual-use items will not require licensing, thereby bringing added clarity to the licensing process.

The release said that draft security guidelines that will apply to all licensed defence industries have been circulated for consultations with various stakeholders .

"It is expected that a complete security framework for Indian private industries participating in defence cases will be in place in the near future," the release said.

The release said that DPP 2011 requires setting-up of a fund to provide necessary resources for development of defence equipment.

It said SIDBI has decided to earmark an amount of Rs. 500 crore for providing loans and another Rs. 50 crore for equity support to ensure regular supply of funds to micro, medium and small enterprises (MSMEs) involved in manufacturing of defence products, .

It said that a stipulation to freeze the service qualitative requirments (SQRs) before the "Acceptance of Necessity" (AoN) stage has been accorded and the validity of AoN has also been reduced from two years to one year to expedite the acquisition process and increase transparency.

The release said that approval for all deviations from the DPP will henceforth be sought from the DAC instead of the defence minister.




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