New defence procurement policy to bring more transparency, speed

With a view to ensure transparency, fast track acquisition process and give a push to ‘Make in India’ initiative, India’s Defence Minister Manohar Parrikar released much awaited Defence procurement policy. “The Defence Procurement Procedure (DPP) can push the agenda of’Make in India’ and India’s target of achieving defence industry network,” Mr Parrikar said at the inauguration of Defence Expo in Goa. The government has tweaked the policies to address the concerns of defence manufacturers and suppliers and enhanced transparency. The new procurement policy is expected to ensure faster pace in procurement especially through newly introduced categories under Indigenously Designed, Developed and Manufactured (IDDM) provisions with an to benefit local units. “Such provisions will encourage Indian industry in Defence Sector,” Mr Parrikar said.

FDI in Defence

In a clear indication to foreign companies that the Indian government may allow higher FDI in some cases, Mr Parrikar said that while Foreign Direct Investment (FDI) in Defence Sector is capped at 49%, cases for higher FDI can be considered on case to case basis. He also acknowledged the contributions of the small and medium scale industries in Defence Sector, saying that many innovative ideas have come from these sectors.

‘Startup India’

The government is also planning to include ‘Startup India’ which will find opportunities in defence sector. “Technology is changing every year and India has the capability to use it in defence production,” Mr Parrikar said. “The new policy will make the world take advantage of technological revolution across India,” he added.

Provisions for Blacklisted Companies

The defence ministry also planning to come up with a new blacklisting policy separately to ensure that there will be no relaxation for those who have already been blacklisted and “bribe givers” will be punished. However, blacklisted companies will be allowed to appeal before a vigilance committee of the defence ministry for delisting under the new policy. The government is also in process to address concerns expressed by the foreign companies. Mr Parrikar has said that those issues will be addressed with the new policy I next 3-4 months.

Fast Track Procurement

The latest policy will now allow the Defence Acquisition Council to take a “fast-track” route to acquire weapons. This provision was earlier restricted to only the armed forces. In an effort to cut down time taken for acquisition process, the new policy mandates that all AONs (Acceptance of Necessity) of a particular platform will now be effective for only six months as against the 12-month validity now.

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