The Defence Acquisition Council (DAC) chaired by Defence Minister Manohar Parrikar on Monday cleared some major changes in Defence Procurement Procedure(DPP)-2016 with focus on ‘Make in India’ and giving a boost to medium and small manufacturing units in Defence production.
Announcing these changes here after the nearly three-and -half-hour DAC meeting, Parrikar said the off set limit was also raised from the present Rs 300 crore to Rs 2,000 crore. Earlier, the foreign vendor had to invest at least 30 per cent of the total cost of the contract into Indian industry as offset if the deal was more than Rs 300 crore.
Having earned more than five billion dollars as offsets to increase capabilities of the Indian industry and nearly eight to 10 billion dollars in the pipeline, the minister said it was difficult to absorb the offsets now. Moreover, the cost of the overall deal also used to go up due to offsets, he said adding the change will help in addressing this critical issue.
On the issue of controversial issue of allowing blacklisted firms to do business in India, the minister said he had recieved the file recently and will take a decision very soon. He said national interest was paramount and supply of critical parts for weapon systems from blacklisted companies was banned thereby affecting operational readiness.
Clarifying that if the CBI had closed cases against some of the companies, he did not see any reason with continuing the ban and denying critical parts to existing weapon systems.
Stating this, the Minister said the completed DPP will be notified for the Indian and international industry within the next two months. It has seven chapters, including forging strategic partnership and separate chapters of fast-track procedures and ship building.
Briefing mediapersons, Parrikar said the DAC gave the go-ahaed for the first two chapters of the DPP focussing on active participation of the Indian private sector, build indigenous design and development capabilities, reduce time line across various stages of procurement and enhance efficiency and effectiveness of the procuremement process.
Regarding this last aspect, Parrikar said the DAC had reduced the time from one year to six months for the armed forces to put forward their requirement for a weapon system known as acceptance of necessity. Moreover, the Services will have to attach the global tender alongwith the acceptance of necessity to cut down time, he added.