Army goes to industry directly after tweak in purchase policy

Through a series of direct industry programmes, the army wants Indian firms to come up with futuristic technologies and products

The Indian Army is now directly engaging with industry after the defence ministry revised the procurement procedure to encourage indigenous players to take up contracts.

The army, through a series of direct industry programmes, wants Indian firms to come up with futuristic technologies and products to cater to the army's needs.

"The needs of the army are two-fold. We want to procure defence equipment and products which cater to the present needs indigenously, but also want the Indian companies to develop futuristic technologies for our needs," Lt General Subrata Saha, deputy chief of army staff of planning and systems, said here on the sidelines of a conference.

The revision in the Defence Procurement Procedure 2016 (DPP 2016), in line with the government's Make in India initiative, encourages indigenous design, development and production of defence-related equipment, he said. The army itself needs to engage directly with the industry to make them understand about the immense monetary potential for the Indian industry.

A crucial revision under the DPP 2016 is classification of Make-1 and Make-2 companies. While Make-1 firms will receive 90 per cent funding from the government to take up critical technological research and develop products (requiring larger infrastructure), Make-2 firms will have to get funding and make products for import substitution.

This category of companies will cater to the current needs of the army.

The DPP also has provisions to reimburse the balance 10 per cent self-funding for Make-1 companies if the request for proposal (RFP) for the product is not issued within two years of the successful development of the prototype.

"We have good capability at home to develop the necessary equipment. The ball has started rolling and there is room for further development. Products designed, developed and manufactured in India will have the highest priority," he said.

Asked if this provision will encourage more government investment in the larger companies having joint ventures with foreign defence players, Saha said there was a threshold limit which will promote smaller companies where the larger ones would not be able to bid.

To encourage the micro-small-medium enterprises, projects with an estimated cost of development of up to Rs 10 crore under Make-1 and Rs 3 crore under the Make-2 category will be earmarked exclusively for them.

The army has been using industry associations' interfaces to connect directly with the industry. Besides, it is also on the lookout for collaboration with various IITs to carry out research and product development. "On one hand, we need products while on the other we are in need of integrated solutions.

We are letting the industry know about these," he added.