Government approves major changes in Defence Procurement Procedure

• Centre has approved major changes to the Defence Procurement Procedure(DPP)

• DAC chaired by Defence Minister Manohar Parrikar gave its approval to the changes.

• The new DPP will streamline defence acquisitions and give a big impetus to indigenisation through the ‘Make in India’ initiative.

New procedure envisages :

•  New category called ‘IDDM’ or ‘Indigenously Designed, Developed and Manufactured’ platforms to promote domestic manufacturing, including government funding for Research & Development .

IDDM is divided into 2 sub-categories :

1.It will be mandatory to have 40 per cent local content in case the design is also indigenous.

2.In case the design is not Indian, 60 per cent local content will be mandatory.

• Recognition of the Micro, Small and Medium Enterprises in technology development.

• It increase in contract threshold from Rs 300 crore to Rs 2,000 crore for offsets.

• It allows government funds up to 90 per cent of development costs to private companies to push research and innovation,of which 20 per cent will be given in advance and in 24 months the entity will be given tender.

Note:If the tender is not given, the private company will get a refund of its expenses.

• It aims to enhance private sector participation and speed up procurement process.

• It sets up an empowered committee to solve disputes or unforeseen issues. Till now disputes went to DAC.

What is  Defence Procurement Procedure(DPP)?

The Government has set up a Defence Acquisition Council headed by the Raksha Mantri for decision making in regard to the totality of the new planning process, which inter-alia involves according ‘in principle’ approval of Capital Acquisitions in the long term perspective plan and according ‘in principle’ approval for each Capital Acquisition programme. The decision flowing from the Defence Acquisition Council are to be implemented by the following three Boards:-

1. Defence Procurement Board headed by the Defence Secretary;

2. Defence Production Board headed by the Secretary (Defence Production);

3. Defence Research & Development Board headed by the Secretary (Defence Research & Development)

Globally, India is the largest buyer of weapons and military equipment, accounting for some 15 per cent of all such international imports, said a report by Sweden-based think-tank Stockholm International Peace Research Institute (SIPRI)