Nod for Defence Acquisition Procedure

What is the news?

The Defence Ministry has Accorded In–Principle (AIP) approval to four projects under Make–I category and five under Make–II category of Defence Acquisition Procedure 2020.

What is Defence Acquisition Procedure (DAP) 2020?

Defence Procurement Procedure(DPP) was first initiated in 2002 to streamline the procurement of military hardware for the Armed Forces in a systematic and time-bound manner. 

It was reformed in 2016 putting an emphasis on indigenously designed, developed and manufactured weapon systems and eventually moved towards self-reliance in the field of defence manufacturing. 

DAP 2020 has been aligned with the vision of the Government  of Atmanirbhar Bharat and empowering Indian domestic industry through Make in India initiative with the ultimate aim of turning India into a global manufacturing hub.

What are the key features of DAP 2020?

Time Bound Defence Procurement Process: A Project Management Unit has been set up to support contract management and to streamline the Acquisition process.

Ban on Import of Certain Items: With a view to promote domestic and indigenous industry, the Ministry of Defence(MoD) will notify a list of weapons/platforms banned for import.

Revised Offset Guidelines: The Offset guidelines have been revised wherein preference will be given to manufacture of complete defence products over components and various multipliers have been added to give incentivisation in discharge of Offsets.

Note: Offsets are a portion of a contracted price with a foreign supplier that must be re-invested in the Indian defence sector, or against which the government can purchase technology.

Rationalisation of Procedures for Trials and Testing: Scope of trials will be restricted to physical evaluation of core operational parameters.

New Category of Buy (Global – Manufacture in India): The new category incorporates ‘manufacture of either the entire/part of the equipment or spares/ assemblies/Maintenance, Repair and Overhaul (MRO) facility for the equipment, through its subsidiary in India.

Leasing: A new category introduced to enable operating of assets without owning thereby, substitute huge initial capital outlays.

Enhancement of Indigenous Content

Make Category: Make category of capital acquisition is the cornerstone of the Make in India initiative:

– ‘Make-I’ refers to government-funded projects 

– ‘Make-II’ covers industry-funded programmes.

– ‘Make-III’ covers military hardware that may not be designed and developed indigenously, but can be manufactured in the country for import substitution, and Indian firms may manufacture these in collaboration with foreign partners.

Reservation in Categories for Indian Vendors: The categories of Buy(Indian-IDDM), Make I, Make II, Production Agency in Design & Development will be exclusively reserved for Indian Vendors meeting the criteria of Ownership and Control by resident Indian Citizens with FDI not more than 49%. 

Source: This post is based on the article “Nod for Defence Acquisition Procedure” published in The Hindu on 4th Mar 2022.