Capital Acquisition and Introduction of Price Variation Formula Added to Draft DPP

Defence Industry

Source: Indian Bureaucracy

New Delhi: The Defence Ministry will introduce new chapters on post-contract management and procurement of ICT software and systems in the draft defence procurement procedure (DPP).

These chapters will be also placed in public domain shortly as part of the draft DPP 2020, a top official said in an online interaction with ASSOCHAM and defence industry representatives.

“New chapters on post-contract management that is still not put out in the public domain and a new chapter on procurement of ICT software and systems where probably a much faster mode of procurement compared to the regular mode of procurement in the DPP is required and that will be coming out,” said Apurva Chandra, DG Acquisition.

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Chandra said the draft of DPP 2020 which was put in public domain in March just before the lockdown, the focus as always was on increased indigenisation, giving impetus to Indian industry and at the same time providing adequate capabilities to the armed forces.

“So taking that into account this time a new arena has been opened with leasing being introduced which was not there earlier. So leasing will be a totally new area and considering the budget constraints also that will probably open a new area of acquisition for the armed forces which will develop over the next few years,” he said.

Noting that indigenous content and how to measure it has always been a contentious issue, Chandra said, “With the support of industry and what they had suggested, we have come out with a new methodology on how indigenous content is to be measured and that is a very objective sort of criteria which has been suggested by the industry itself.”

On the changes in DPP 2020, Chandra said it has been tried to reduce the load on industry in terms of bank guarantee, besides trial and quality acceptance procedures have been made more transparent.

Responding to questions pertaining to raising FDI limit in defence production from 74 per cent to 100 per cent, he said, “I think it is a big step that we have moved from 49 per cent to 74 per cent and we should celebrate that rather than pitching for 100 per cent as it does not make much of a difference since you have direct control.”

On the issue of strategic partnership which was formulated in 2016, the DG Acquisition said, “I do not think we contemplate any change because we have already moved ahead and we are already incentivising transfer of technology and other things.”

In a remark that could enthuse MSME in Defence sector, he said government was “contemplating to reserve any procurement less than Rs 50 crore per year for MSMEs within India, if such products are available within the country.”

On the retention of trial equipment, Chandra said the Ministry would revisit this particular provision and it will be modified.

ASSOCHAM Secretary General, Deepak Sood welcomed the draft DPP 2020 as it addresses key issues.

Salil Gupte, President of Boeing India, said “DPP 2020 brings forward new concepts and procedures such as the leasing of equipment as a new mode of acquisition, smoother execution of contracts and the long-term sustainment contracts for the entire lifecycle of the product.

However, there is potential to revaluate the parameters for discharging offset obligations and its practical implementation. Defence offsets are regarded across the world as a key enabler of industrial development, driving economic benefits and growth by providing skilled jobs, growing foreign investments, and enabling the transfer of advanced technologies.”

In his address Rajinder Bhatia, President & CEO, Bharat Forge Limited said, “Draft DPP is a transformational document which has evolved with the help of industry and has the potential to bring about marked change for the better in the acquisition process.”

Ashish Saraf, Head – India & South Asia, Airbus Helicopters said, “The draft DPP is a welcome step towards enhancing India’s self-reliance in defence equipment requirements. With some further improvements, the DPP can eliminate inequitable loopholes and establish a level-playing field to realise the entire gamut of India’s strategy and ambitions in the aerospace and defence sector.”

“The DPP is an evolutionary document, and with its intent to increase indigenisation, it will continue to benefit from stakeholder interaction and inputs,” said Nilaya Varma, Co-Founder & CEO, Primus Partners.

Dr SC Kansal, chairman, SM Group said, “The DPP 2020 draft intends to achieve broad objectives of a smooth procurement process by removing procedural bottlenecks. It has laid stress on innovation and promoting the ‘Make in India’ in defence.”

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