The Defence Acquisition Council (DAC) chaired by the Union Defence Minister Manohar Parrikar has approved major changes in the new Defence Procurement Procedure (DDP) 2016. These changes were made in Defence Procurement Procedure 2016 to streamline defence acquisitions and give a big impetus to indigenisation of Defence sector through the ‘Make in India’ initiative. Some of the changes were based on re-commendations of the expert committee headed by the former Home Secretary Dhirendra Singh.
Major Changes are
- Addition of new category to promote domestic manufacturing, including government funding.
- The funding will be mainly in technology development for Research and Development (R&D) and recognition of the Micro, Small & Medium Enterprises (MSME).
- New category Indigenously Designed, Developed and Manufactured (IDDM) platforms have been added and it will be the priority route for procurements.
- Under IDDM, there will be 2 sub-categories one with mandatory 40% domestic content for a domestic design. Other will be for mandating 60% local content if the design is not domestic.
- Under it, eligible domestic companies will have majority Indian control and operated by the Indian nationals.
- Government will fund private Research &Development for building a defence technology base in the country for which various norms have been stipulated.
- Under it companies are eligible for up to 90% funding. Contentious issue of offsets has been amended from the current 300 crore rupees to 2000 crore rupees to give flexibility for foreign companies.
- Currently, offset clause mandates that a foreign company should invest 30% of the contract value back into the country with a view to bring in technology.
Defence Acquisition Council approves major changes in Defence Procurement Procedure 2016
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