New Defence Procurement Policy on Nov 1

India will bring out its new Defence Procurement Policy (DPP) on November 1 to promote joint ventures or co-production arrangements for big foreign original equipment manufacturers (OEMs) with domestic firms. The new policy will incorporate changes in the DPP-2008 released last September.

Defence Minister A K Antony told a seminar on defence acquisition here that the current review in DPP, which would be carried out annually instead of once in two years, aims at "promoting and facilitating" Indian industry and "transparency and integrity" in defence acquisitions.

"We have, as per our resolve to revise the DPP annually, reviewed the DPP and are ready to promulgate DPP-2009 with effect from November 1, 2009. The current review is primarily focused on two essential areas of promoting and facilitating wide participation of defence industry and enabling transparency and integrity in acquisitions," he said.

Under DPP-2008, the tender papers were issued only to foreign vendors, who are required to transfer technology to an Indian defence industry, called Production Agency, under 'Buy and Make' category.  

"This does not promote setting up of joint venture or co-production arrangements in India by big foreign Original Equipment Manufacturer.

"In order to obviate the above shortcoming, a new category — Buy and Make (Indian) — is being introduced, which allows issue of Request for Proposals (RFP) to Indian industries having requisite financial and technical capabilities to absorb technology and undertake indigenous manufacture through transfer of technology and not through research and development," Antony said.

To ensure transparency and enhance awareness among Indian industry, the Defence Ministry will share the armed forces' 15-year Long Term Acquisition Plan, a public version at that, on its website that would enable them to work out technological requirements and build in-house capabilities to meet future defence needs.

Apart from putting up all Request for Information (RFI) on the website, the Ministry would also invite industry representatives for consultations and presentations during high-level procurement meetings before a decision is taken on the source and methodology for procurement of defence weapons and equipment.

For maintaining probity in defence procurement deals, the Ministry would also increase the role of independent monitors to scrutinise complaints of any violation of Integrity Pact that prohibits corruption.

The new DPP, to facilitate discharge of offset obligations, has incorporated an enabling clause to permit change of offset partners in exceptional cases, Antony said, adding the option clause has been amplified to state that the offsets would not be applicable in cases where the same was not included in the original contract.

Pointing out that the offset policy in defence acquisition was expected to bring $10 billion by the end of current plan period, Antony said India had emerged as a large defence market and this was evident from the fact that the government had provided for about $8.5 billion for capital acquisition in the defence budget this financial year and over the next five to six years, would allocated nearly $50 billion as budgetary provision.