Draft DPP 2020 introduces 'leasing' as category to get defence equipment at affordable rates

The government issued the draft Defence Procurement Procedure (DPP) 2020 on Friday, wherein it introduced "leasing" as another category to get defence equipment at affordable rates.

Moreover, the indigenous content stipulated in various categories of procurement was enhanced to support the "Make in India" initiative, a statement issued by the government said.

To facilitate greater participation of the Indian industry and develop a robust defence industrial base, use of indigenous raw materials, special alloys and software has been incentivised under the DPP 2020.

Moreover, a "price variation clause" has been introduced that will be applicable to all cases where the total cost of contract is more than Rs 1,000 crore and the delivery schedule exceeds 60 months.

"Leasing is introduced as a new category for acquisition in addition to the existing 'Buy and Make' category to substitute huge initial capital outlays with periodical rental payments.

"Leasing is permitted under two categories i.e lease (Indian), where the lessor is an Indian entity and the owner of the assets, and lease (global), where the lessor is a global entity," the statement said.

The draft has now been put up for public consultations till April 17, after which it will be finalised.