Second defence acquisition draft talks of leasing equipment

FPJ Bureau | Updated on: Wednesday, July 29, 2020, 02:02 AM IST

Indian Army | PTI Photo by Kamal Kishore
Indian Army | PTI Photo by Kamal Kishore

The Ministry of Defence (MoD) on Tuesday uploaded the second draft of the Defence Procurement Procedure (DPP), 2020, on its website inviting suggestions and comments from the stakeholders and general public by August 10.

It is based on the first draft that attracted comments from the services and various stakeholders running into more than 10,000 pages. A review committee finalised the second draft based on the first one. It is driven by tenets of the defence reforms announced as part of the "Atmanirbhar Bharat Abhiyan," says a ministry press release.

The draft envisages that the MoD will notify a list of weapons/platforms banned for import and updated from time to time to promote domestic industry. It also for the first time envisages leasing to possess and operate the military assets without owning them in addition to the existing 'Buy' and 'Make' categories, saying it will be useful to substitute huge initial capital outlays with periodical rental payments. The vendors have to fill up the proforma detailing the indigenous and foreign contents in each contract.

The proposed new policy envisages three kinds of acquisitions – long term integrated perspective plan of 15 years, five-year services capital acquisition plan and 2-year annual acquisition plan – and lays down the planning processes at these three levels. It also calls for independent external monitors to examine referrals by the ministry or suo moto complaints by vendors or any other agency.

The defence acquisition procedure (DAP), which will supersede the Defence Procurement Procedure, 2016 coming into effect from September 1, 2020 and remain in force till August 31, 2025, is envisaged in the draft covers all capital acquisitions, both from indigenous sources and ex-import, except for medical equipment, and how it will apply to the ongoing purchases. It envisages re-designation in the acquisition wing of the Defence Ministry as additional director generals and deputy directors general. Procurement of goods and services is laid down under the DAP but procurements through any other procedure would require approval of the Defence Acquisition Council (DAC) for each such case.

The capital acquisitions are classified as buy, buy & make, leasing, make, design and development and strategic partnership model. The draft envisages a simplified procedure for replenishment or repairs or refits of recurring nature entailing high cost and longer service life. It envisages priority of all requirements as (1) Buy (Indian-IDDM - Indigenously Designed, Developed and Manufactured), (2) Buy (Indian), (3) Buy & Make (Indian), (4) Buy & Make, (5) Buy (Global - Manufacture in India) and (6) Buy (Global). Each category is explained in detail in the draft.

It also calls for offset clause for buy & make and buy (global) categories where the cost of buy portion is Rs 2,000 crore or more and provides for conditions in which the offset clause will be waived. It defines who will be the Indian vendor, based on the indigenous content, who will have 30% or more under Buy (Global) category but with no foreign vendor, and 50% or more in case of other categories.

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Published on: Wednesday, July 29, 2020, 02:02 AM IST