New procurement policy unveiled by Defence Ministry

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, the apex decision making body of the MoD, amended Defence Procurement Procedure (DPP).

The salient features of new policy are:

a) Preference for indigenous procurement in the Defence Production Policy 2011 has now been made a part of DPP through an amendment that provides for a preferred order of categorisation, with global cases being a 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”; and (5) “Buy (Global)”. Any proposal to select a particular category must now state reasons for excluding the higher preferred category/ categories.
b) The armed forces will have to explain to the Ministry when they do not prefer to buy from Indian sources or are excluding the higher category.
c) The financial powers of the Services chiefs and the chief of the Coast Guard have been enhanced from Rs. 50 crore to Rs. 150 crore for capital acquisition cases.
d) To avoid scams such as the AgustaWestland chopper deal and enhance transparency, the Ministry also approved a proposal under which Services headquarters would be required to freeze specifications of the desired products before they are approved by the Defence Acquisition Council (DAC).
e) PSUs and ordnance factories in the defence sector will not be automatically nominated for maintenance and repair of systems procured from abroad, private firms will be allowed to take part in these contracts.
f) Private and public sector firms can tie up with foreign vendors and produce the equipment required by the armed forces within the country.
g) The DAC approved release of a public version of its 15-year perspective document (LTIPP), for 2012-2027 outlining the ‘Technology Perspective and Capability Roadmap’ (TPCR). “The TPCR will provide useful guidance to the Indian defence industry for boosting its infrastructural capabilities and directing its R&D and technology investments.
h) The DAC also approved an amendment mandating consultations to begin sufficiently in advance of actual procurement by Services, so that capital acquisition plans can be translated into national defence Research and Development and production plans.
i) 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
j) Ministry has also approved draft security guidelines for the private sector firms to adopt under which they will have to maintain a minimum-required security perimeter for their facilities.
k) In order to ensure regular supply of funds to Medium and Small Enterprises involved in manufacturing of defence products, SIDBI has decided to earmark an amount of Rs. 500 crore for providing loans.