DRDO tweaks manual for ‘self-reliance’ push
Defence minister Rajnath Singh on Tuesday released the procurement manual (PM-2020) that seeks to encourage more participation from Indian industry, especially start-ups and micro, small and medium enterprises (MSMEs), for achieving self-reliance in the defence sector, the defence ministry said in a statement.Updated: Oct 21, 2020, 00:39 IST
The Defence Research and Development Organisation’s new procurement manual has raised the limit of advance payment to vendors, allowed awarding contracts to the second lowest bidder (L2) if L1 (the lowest bidder) backs out, and done away with the need to furnish performance bank guarantees — key measures that seek to provide a boost to the indigenous defence industry, DRDO chief G Satheesh Reddy said.
Defence minister Rajnath Singh on Tuesday released the procurement manual (PM-2020) that seeks to encourage more participation from Indian industry, especially start-ups and micro, small and medium enterprises (MSMEs), for achieving self-reliance in the defence sector, the defence ministry said in a statement.
The changes in the manual were suggested by a high-powered committee after a year-long study. The current industry base of DRDO consists of 1,800 MSMEs, defence public sector undertakings, ordnance factories and large-scale industries.
“The new DRDO procurement manual will facilitate the indigenous defence industry by simplifying the processes and ensure their participation in design and development activities,” Singh said.
The last major revamp of the manual was carried out in 2006, with some changes introduced a decade later in 2016. “Some more enabling measures of PM-2020 are exemption of bid security and performance security up to ₹10 lakh, no negotiations for commercial off-the-shelf (COTS) items/services wherever price discovery is happening through market forces and procurement of stores from development partners,” the ministry said, adding that the PM-2020 will facilitate faster execution of R&D projects.
The DRDO’s annual budget for procurement, R&D and grant-in aid is around ₹15,000 crore.
Reddy said the new manual has simplified internal processes as well. “What took six months earlier will now be achieved in a month. Procurement will move at a faster pace. The delivery period extension process has been simplified too, with project directors being empowered to take quick decisions.”
He added that PM-2020 has introduced a provision for leasing of equipment required for a short period if it is a better option to an outright purchase.
“In the new PM-2020, the liquidated damage (LD) rate for development contracts has been reduced,” the statement said. The changes in the procurement manual were suggested by a high-powered committee set up in October 2019 and headed by director general (naval systems and materials) Samir V Kamat. The new manual incorporates at least 60 changes, most of them focused on supporting MSMEs.
Raising the limit for advance payment to vendors/partners is seen as a significant step by analysts. Until now, they were receiving only 15% of the cost as advance but the new manual has raised it to almost 40%, the DRDO chief said. The decision to place orders with L2 if L1 backs out will do away with the need for re-tendering that causes delays in procurement, Reddy added.
CII national MSME council co-chairman Ashok Saigal said MSMEs would benefit significantly from the increase in advance from 15% to 40%.
“It is an important move as it will help MSMEs sustain themselves during the long gestation period of product introduction, qualification and coming into use in commercially meaningful quantities,” Saigal said. CII has around 9,000 members, with MSMEs accounting for 70% of that figure.
In August, DRDO came out with a list of 108 systems and sub-systems that it would help the Indian industry design and develop to strengthen the local defence ecosystem — from mini unmanned aerial vehicles to fire detection systems and bullet proof vehicles to tank transporters.
The other items on the list include NBC (nuclear, biological and chemical) shelters, missile canisters, navigation radars, satellite navigation receivers, mine-laying equipment and armoured engineering reconnaissance vehicles.
The government has already announced that it will ban the import of 101 different types of weapons, systems and ammunition over the next five years, a significant step on the long road towards achieving self-reliance in the defence sector.
The negative import list included artillery guns, light military transport aircraft, conventional submarines and long-range land attack cruise missiles.
The detailed list of equipment published by the defence ministry in August also spelled out that the embargo on import will kick in between December 2020 and December 2025 for different categories of military hardware.
The military hardware on the negative import list includes assault rifles, sniper rifles, short-range surface-to-air missiles, beyond visual range air-to-air missiles, corvettes, missile destroyers, light combat helicopter, ship-borne cruise missiles, light combat aircraft, a variety of radars and different types of ammunition.