NEW DELHI, MARCH 20
Giving shape to Prime Minister Narendra Modi’s dream of self-reliant in defence equipment production, the Ministry of Defence has come up with a new Defence Procurement Procedure (DPP) 2020 on Friday. Under this draft proposal, thrust has been given on higher indigenous content, incentives for local material and software as a part of ‘Make in India’ initiative. Moreover, “leasing” provision has been introduced as a new category for acquisition to existing ”buy and make” categories.
Unveiling the Draft Defence Procurement Procedure 2020 on Friday, Defence Minister Rajnath Singh said, “I had constituted a review committee in August 2019 to revise the present DPP-2016. It gives me satisfaction to announce that the draft of DPP 2020 has been prepared.”
Last changes in DPP were made in 2016. The draft Defence Procurement Procedure (DPP) 2020 has been put in the public domain. This is a draft DPP which will be circulated to all stakeholders for comment within four weeks. Further refinement will be carried out based on suggestions and feedback.
“In new Draft Defence Procurement Procedure 2020, we have simplified the procedure and reduced the timeline to ensure probity, transparency and accountability,” Singh said.
The minister said that life cycle support of procured equipment and platforms in this new procedure has been taken up strongly.
“The introduction of a strategic partnership model to progressively build capabilities of the private sector and a new category with the highest priority became a defining feature in DPP 2016,” said Singh, adding that under this model several projects of national importance such as the production of 111 naval utility helicopters and construction of six P-75 (I) submarines have shown considerable progress.
Singh said, “The DPP 2020 is aligned with the vision to empower private industry through Make in India initiative with the ultimate aim of turning India into a global manufacturing hub.”
He also stressed that indigenous content stipulated in various categories of procurement has been enhanced to support the Make in India initiative.
The draft DPP also talked of aligning capital with revenue budget related to the sustainment of weapons and equipment in the long run.
Defence Secretary Ajay Kumar stressed that in the new DPP, there is a special provision for startups and Ministry of Micro, Small & Medium Enterprises to enter the defence sector.
“It will provide grants and funding and other support to carry out research and development to a start-up which has a good potential for future adoption for Indian defence needs,” Kumar said.
Giving details about the changes made, Director General (Acquisition) Apurva Chandra said for the first time leasing is introduced as another category for acquisition as it provides for an innovative technique for the financing of equipment.
“Leasing provides means to possess and operate the asset without owning it and is useful to substitute huge initial capital outlays with periodical rental payments,” said Chandra, adding that leasing would be permitted in two sub-categories that Lease (Indian) and Lease (global).
Earlier India took various equipment on lease from friendly countries, especially Russia, on personal request. For instance, Indian Navy has taken nuclear-powered submarine INS Chakra into its fleet in 2012 on lease. The government had then said the step to get INS Chakra reflects the high level of cooperation and strategic partnership between India and Russia.
The Director-General (Acquisition) also pointed that a new category Buy (Global-Manufacture in India) has been introduced with the outright purchase of equipment from foreign vendors for quality considered necessary with minimum 50 per cent indigenous content on the cost basis of total contract value and balance to be manufactured in India.
He also said that revised defence offset guidelines have been proposed to attract investment in defence manufacturing, including in Defence Industrial Corridors through FDI or direct investment or joint investment or the non-equity route for co-production, co-development and production or licensed production of defence products.
