DAC ap­proves ma­jor changes in DPP to en­cour­age In­dian de­fence in­dus­try


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 (DAC), the apex de­ci­sion-mak­ing body of the Min­istry of De­fence, took a se­ries of de­ci­sions re­cently, in­clud­ing amend­ments to the De­fence Pro­cure­ment Pro­ce­dure (DPP).

The De­fence Min­is­ter A.K. Antony, who chaired the meet­ing, said the only way for­ward for the coun­try is rapid in­di­geni­sa­tion of de­fence prod­ucts, with both the pub­lic and the pri­vate sec­tors play­ing piv­otal roles in this en­deav­our. He said the govern­ment will make all ef­forts to cre­ate gen­uine level play­ing field for In­dian man­u­fac­tur­ing in­dus­tries vis-à-vis global play­ers. Fol­low­ing are key amend­ments to the DPP-2011: Pri­ori­ti­sa­tion of var­i­ous cat­e­gories for cap­i­tal ac­qui­si­tions un­der DPP 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. Re­lease of pub­lic ver­sion of LTIPP The DAC has ap­proved the re­lease of a pub­lic ver­sion of its 15-year long-term in­te­grated per­spec­tive plan (LTIPP), out­lin­ing the Tech­nol­ogy Per­spec­tive and Ca­pa­bil­ity Roadmap (TPCR) against LTIPP 2012-27. The TPCR will pro­vide use­ful guid­ance to the In­dian De­fence In­dus­try for boost­ing its in­fras­truc­tural ca­pa­bil­i­ties and di­rect­ing its R&D and tech­nol­ogy in­vest­ments. Main­te­nance ToT (MToT) no longer through nom­i­na­tion MToT has been hith­erto re­served largely for OFB and DPSUs through the nom­i­na­tion process. A DPP amend­ment has been ap­proved that does away with nom­i­na­tion by the Depart­ment of De­fence Pro­duc­tion and fa­cil­i­tates se­lec­tion of MToT part­ners by In­dian bid­ders. This mea­sure is ex­pected to have a pos­i­tive im­pact on pri­vate sec­tor par­tic­i­pa­tion in main­te­nance, re­pairs and over­haul work. Ad­vance Con­sul­ta­tions for “Make” Pro­ce­dure The DAC has ap­proved an amend­ment man­dat­ing con­sul­ta­tions to be­gin suf­fi­ciently in ad­vance of ac­tual pro­cure­ment by Ser­vice Head­quar­ters (SHQs), so that cap­i­tal ac­qui­si­tion plans can be trans­lated into national de­fence R&D and pro­duc­tion plans. In ad­di­tion, 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. Sim­pli­fi­ca­tion of “Buy & Make (In­dian)” Pro­ce­dure The DAC has ap­proved an amend­ment fur­ther sim­pli­fy­ing this com-

• plex cat­e­gory. Its pro­ce­dures have been brought on par with other cat­e­gori­sa­tions, re­sult­ing in faster pro­cess­ing of cases un­der this cat­e­gory. • Clear def­i­ni­tion of in­dige­nous con­tent In­dige­nous con­tent has now been de­fined in an un­am­bigu­ous man­ner, pro­vid­ing req­ui­site clar­ity and a com­mon un­der­stand­ing. En­sur­ing faster progress in “Make” and “Buy & Make (In­dian)” cases The Min­istry has a limited num­ber of ac­qui­si­tion cases un­der “Make” and “Buy & Make (In­dian)” cat­e­gories, with an es­ti­mated value of ` 1,20,000 crore. In­struc­tions have been is­sued for speed­ier con­clu­sion of th­ese cases. De­fence Items List The De­fence Items List has been fi­nalised by the Min­istry and sent to DIPP for no­ti­fi­ca­tion, which will bring re­quired clar­ity in the li­cens­ing process. Li­cens­ing for Dual-Use Items The Min­istry has cat­e­gor­i­cally clar­i­fied to DIPP that dual-use items will not re­quire li­cens­ing, thereby bring­ing added clar­ity to the li­cens­ing process. Con­sul­ta­tions on Se­cu­rity Guide­lines for In­dian De­fence In­dus­try Draft Se­cu­rity Guide­lines that will ap­ply to all li­censed de­fence in­dus­tries have been cir­cu­lated for con­sul­ta­tions with var­i­ous stake­hold­ers. It is ex­pected that a com­plete se­cu­rity frame­work for In­dian pri­vate in­dus­tries par­tic­i­pat­ing in de­fence cases will be in place in the near fu­ture. Res­o­lu­tion of Tax-re­lated Is­sues Res­o­lu­tion of deemed ex­ports sta­tus for cer­tain de­fence projects and ra­tio­nal­i­sa­tion of tax and duty struc­tures im­ping­ing on the In­dian de­fence in­dus­try has been taken up by the MoD with the Min­istry of Fi­nance. Funds for MSMEs in the De­fence Sec­tor In or­der to en­sure reg­u­lar sup­ply of funds to MSMEs in­volved in man­u­fac­tur­ing of de­fence prod­ucts, SIDBI has de­cided to ear­mark an amount of ` 500 crore for pro­vid­ing loans, and fur­ther, a fund of ` 50 crore for eq­uity sup­port out of “In­dia Op­por­tu­ni­ties Fund” man­aged by its sub­sidiary, namely, SIDBI Ven­ture Cap­i­tal Ltd. Ef­fi­ciency and Trans­parency in De­fence Pro­cure­ment A stip­u­la­tion to freeze the SQRs be­fore the “ac­cep­tance of ne­ces­sity” (AoN) stage has been ac­corded, and the va­lid­ity of AoN has also been re­duced from two years to one year. Th­ese mea­sures are ex­pected to ex­pe­dite the ac­qui­si­tion process and in­crease trans­parency. En­hanced Del­e­ga­tion of Fi­nan­cial Pow­ers The fi­nan­cial pow­ers of Ser­vice Chiefs/DG Coast Guard have been en­hanced from ` 50 crore to ` 150 crore for cap­i­tal ac­qui­si­tion cases. Pow­ers to DAC Ap­proval for all de­vi­a­tions from the De­fence Pro­cure­ment Pro­ce­dure will hence­forth be sought from the DAC in­stead of the De­fence Min­is­ter.

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