| #1018 |  | 1254 |  |
May 20, 2013 |  | By Karanpreet Kaur | ||
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The highlights of the amendments in the DPP are as follows:[1]
The major shift in the proposed DPP has been the redefinition of procurement categories into five and their prioritisation. For all capital acquisitions, “Buy (Indian)” would be the topmost priority and “Buy (Global)” having least priority. According to the revision, if any category has to be selected, the proposal must state reasons for excluding the higher preferred category. The order of priority of the acquisition categories are:
DAC has approved the release of the public version of the 15 year Long Term Integrated Perspective Planning (LTIPP) (2012-2027) outlining the Technology and Capability Roadmap (TPCR), aiming to provide guidance to the defence industry for planning their infrastructural capabilities and directing their Research & Development (R&D) and technology investments. It is a good move on the part of the government however, it remains to be seen how well the industry makes use of the presented opportunity. The DPP amendment discards the nomination of OFB and DPSUs for MToT[2] in order to encourage private sector participation in Maintenance, Repair and Overhaul (MRO) work. This measure is a step towards providing level playing field to the private players and will have a positive impact on the defence industry. A clear definition of indigenous content providing the much needed accuracy and decipherability in indigenisation is likely to be enunciated in the forthcoming DPP. Earlier, the DPP only specified the amount of indigenous content mandatory for programmes under the “Buy (Indian)” or “Buy & Make (Indian)” categories. The process and criteria for licensing defence items will be defined clearly with dual use items not requiring licensing. The revision postulates that the SQRs will have to be frozen before AoN stage and the latter is valid for one year as compared to the previous time period of two years. This reform is expected to accelerate the acquisition process and save the users the agony of time delays. The financial powers of the Service Chiefs are proposed to be raised from INR 50 crore to INR 150 crore, thereby giving flexibility to the decision makers for quick acquisition of low value equipment. DAC has been entrusted with greater powers in the sense that all deviations from the DPP will have to be approved from DAC instead of the Defence Minister, which is positive case of devolution of powers. Most of the amendments will have a positive impact on Indian private industry. However, there are apprehensions of the adverse outcome of category prioritisation on the defence modernisation drive. It is envisaged that the Indian industry would be able to acquire technology from foreign technology partners by forming Joint Ventures, partnerships etc. and offer solutions to the defence forces. Though the purpose behind the approach is focus on indigenisation and encouraging the domestic defence industry, it is questionable whether on ground the approach will be pragmatically possible. India does not possess the technological capability and expertise to develop and produce requisite defence systems indigenously and to meet all the military requirements on its own.. The requirements of huge investments, infrastructure, experienced professionals and test facilities would present considerable obstacles in rapid indigenous production. The development and qualification process of defence equipment is very tedious and time consuming. The stringent No Cost No Commitment (NCNC) trials (field trials, Electromagnetic Compatibility/Electromagnetic Interference (EMI/EMC), quality assurance tests) by the users in different environmental conditions involve lots of resources, capital and risks. According to the DPP amendments, if any category has to be selected, the proposal must state reasons for not selecting the higher categories. Sequentially going through the priority list may be feasible in certain cases; however execution of this procedure across the board would be impossible. It has been stated that the right of refusal will be with the Indian industry. The industry would tend to opt for either of the first two categories. It will be very difficult for the local industry to undertake projects like development/production of critical equipment like aircrafts, missiles, sensors etc. Therefore, the categorisation committee should critically examine essential factors like capability of the industry, the difficulty in mastering such technologies, foreign restrictions on military equipment and the urgency of induction of equipment by our armed forces before carrying out procurement categorisation. In order to fulfill the existing operational voids, critical acquisitions would have to be handled on case by case basis to avoid potential risk of huge time delays resulting from a new, well intentioned but untested procurement system. The author is a Research Assistant at CLAWS. Views expressed are personal | ||||||||
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References
[2] The foreign vendor would have to transfer technology for maintenance to an Indian entity which would be responsible for providing base repairs (third line) and the requisite spares for the entire life cycle of the equipment. The Indian entity could be a company incorporated under The Companies Act 1956, including DPSUs or entities like OFB / Army Base Workshops / Naval dockyards / Base Repair Depots of Air Force. This entity would be nominated by DDP at SCAPCHC stage and would be included in the recommendations of SCAPCHC as also in the SoC submitted to DAC for seeking approval of AON. “Defence Procurement Procedure 2011” from http://mod.nic.in/dpm/DPP2011.pdf | ||||||||
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