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Private sector to compete with DRDO and PSUs

Special Correspondent

New defence procurement policy to go on stream from Sunday

Plan to enhance the role of independent monitors to ensure probity in defence deals
Stress on transparency in defence deals

NEW DELHI: The government has announced a significant shift in the latest Defence procurement policy (DPP) by inserting a new “Buy and Make [Indian]” category and promised to make public contours of its 15-year acquisition plan and enhance the role of independent monitors to ensure probity in defence deals.

The broad brush strokes of DPP-2009, which will go on stream on Sunday, were made by Defence Minister A.K. Antony at a seminar on “Defence Acquisition,” organised by the Institute of Defence Studies and Analyses (IDSA) here. Aimed at energising the private industry, the new category would make it possible for companies with requisite financial and technical capabilities to absorb technology and undertake indigenous manufacture. It would also enable private industries to compete with the Defence Public Sector Undertakings.

In the current procedure under the “Buy and Make” category, the Request for Proposal (RFP) is issued only to foreign vendors, who are required to transfer technology to Indian defence industry called production agency.

The Minister noted that the present category did not promote setting up of joint ventures or co-production arrangements in the country by big foreign original equipment manufacturers.

Vital difference

A vital difference in the new category was that production and development by the Indian industry will be through transfer of technology and not through research and development.

“This is primarily aimed at encouraging pro-active participation by the Indian industry, who could establish joint venture/production arrangements with any foreign manufacturer. The needs of the Services will be shared with capable Indian firms, who in turn would submit a road map for development and production of a particular item over its life cycle,” Mr. Antony said. The Minister’s stress on transparency in defence deals is reflected in the decision to place on the Ministry website the public version of 15-year Long Term Acquisition Plan of the Armed Forces and shared with industry associations to create awareness among them. Another important feature of the new DPP will be the mandatory issue of Request for Information, which will be put on the Ministry website in all the acquisition cases. To enable participation of industry in Defence Acquisition Planning, the Ministry will invite their representatives for consultations and presentations in high-level procurement meetings before a decision is taken on the source and methodology for procurement of Defence weapons and equipment.

Independent monitors

To increase probity in defence deals, the DPP proposes to enhance the role of independent monitors, scrutinise complaints of violations of Integrity Pact that prohibits corruption.To facilitate the discharge of offset obligations, an enabling clause has been incorporated to permit change of offset partners in exceptional cases. The Minister noted that India had emerged as a large defence market with the current budget providing some $ 8.5 billion (approximately Rs. 45,000 crore) and over the next five to six years, the total budgetary provision was likely to reach $ 50 billion (approximately Rs. 2,50,000 crore).

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