Draft of policy to lease military hardware unveiled
India on Friday unveiled a draft policy on arms acquisition that allows the armed forces to lease military hardware for the first time -- a move that could cut down on costs associated with buying weapons and systems , a defence ministry spokesperson said.
The draft Defence Procurement Procedure (DPP)-2020, made public by defence minister Rajnath Singh, has also introduced a new provision --- the ‘Global-Manufacture in India’ category --- that stipulates that only a minimum necessary quantity of defence equipment will be bought from abroad with the rest being manufactured in India.
Another key proposal in the draft DPP relates to increasing the indigenous content in weapons and systems being bought by 10% to boost the Make in India initiative.
“Leasing has been introduced as a new category for acquisition in addition to existing ‘Buy’ and ‘Make’ categories to substitute huge initial capital outlays with periodical rental payments. Leasing is permitted in two categories --- Lease (Indian) where lessor is an Indian entity and is the owner of the assets and Lease (Global) where lessor is a global entity,” the ministry said in a statement. The provision of leasing in the draft DPP will govern military equipment that is not deployed during war --- transport fleets, trainers and simulators.
The ministry said the provisions in the draft DPP seek to increase local manufacturing and reducing timelines for procurement of critical military equipment.
“Our aim is to make India self-reliant and a global manufacturing hub. The government is constantly striving to formulate policies to empower the private industry, including micro, small and medium enterprises, in order to develop the eco-system for indigenous defence production,” Singh said.
The minister said it was time to take concrete steps to strengthen the Make in India initiative, refine provisions related to life cycle support of procured equipment and hasten defence acquisition by simplifying procedures.
The eagerly-awaited DPP-2020 needs to live up to its promise of easing and expediting procurement procedures, besides getting the private sector involved in a big way, said Air Vice Marshal Manmohan Bahadur (retd), additional director general, Centre for Air Power Studies.
“So while there are a lot of expectations on the premise that the new DPP will deliver, the fact is that in the final analysis the budgetary allocation for capital acquisitions becomes the final arbiter,” Bahadur added. According to Union Budget 2020-21, India will spend Rs 1.13 lakh crore on acquisition of defence hardware.
Detailing the new ‘Global- Manufacture in India’ category, the ministry statement said it has been introduced to ensure a minimum 50% indigenous content (by cost and on basis of total contract value). “This would be in preference to the ‘Buy Global’ category as manufacturing will happen in India and jobs will be created in the country,” it added.
The draft DPP has also introduced a new chapter for post contract management to facilitate and provide clear guidelines for issues arising during the contract period as defence contracts are spread over long periods.
The draft DPP also underlines that field evaluation trials for weapons and systems are to be conducted with the objective of nurturing competition rather than eliminating players for minor deficiencies.
The draft DPP, prepared by a review committee headed by director general (acquisition), is based on the recommendations of all stakeholders including private industry. Eight sub-committees of experts, headed by three-star officers, assisted the review committee. The draft DPP has been uploaded on ministry’s website for further suggestions by different stakeholders by April 17.